A month ago I began hearing about impending layoffs at IBM, but what could I say beyond “layoffs are coming?” This time my first clues came not from American IBMers but from those working for Big Blue abroad. Big layoffs were coming, they feared, following an earnings shortfall that caused panic in Armonk with the prospect that IBM might after all miss its long-stated earnings target for 2015. Well the layoffs began hitting a couple weeks ago just before I went into an involuntary technical shutdown trying to move this rag from one host to another. So I, who like to be the first to break these stories, have to in this case write the second day lede: what does it all mean?

It means the IBM that many of us knew in the past is gone and the IBM of today has management that is, frankly, insane.

Tough talk, I know, but I’ll offer up right here and now a very public experiment to prove what I mean.

I call them like I see them and always have. That’s my reputation. Ask Steve Ballmer at Microsoft if he likes my work and he may very well say “no.” Ask Larry Ellison. Ask Larry Page. You can’t ask Steve Jobs but you can ask Tim Cook. Do they like my work? No. no, and no. Now ask if they respect my work and every one of those men will probably say “yes.” Because I call them like I see them and always have.

So you are about to read here a very negative column about IBM saying things you may or may not already know but it generally comes down to the idea that those folks in Armonk are frigging crazy and are doing both their company, the nation — maybe the world — an incredible disservice.

Here comes the experiment. Look at the comments at the bottom of this column. There will shortly be dozens, possible even hundreds, of them. See how many of those comments are from happy IBM customers. If IBM is doing a good job then IBM customers will speak up to support their vendor and tell me I am full of shit. Customer satisfaction is all that matters here, because at the end of the day companies live and die not by their quarterly earnings-per-share but by their ability to please customers. And I’m quite willing to predict that the number of comments from happy IBM customers below will be close to zero, because IBM is a mess, customers are pissed, and management doesn’t seem to care.

Feel free to go check the comments right now and I’ll wait for you to come back……..

See?

Let’s look at IBM’s recent financial numbers, which you can find in several places (I prefer Yahoo Finance, myself). IBM’s Global Technology Services brings in the most revenue, 38.5 percent and 29.4 percent of the profit. Only the software group is bringing in more actual profit. IBM’s big money maker is struggling. Revenue is slipping and profits are being maintained by cost cutting. Cost cutting is hurting the quality of service and that is contributing to the decline in overall business. There is no rocket science to this.

Internally IBM is amazingly secretive. Employees are rarely told anything of substance. This includes business plans. For the most part the rank and file of IBM do not know anything about the company’s business plans. What is Ginni Rometti (she’s the chairman, president and CEO of IBM) doing? What is her plan? Most of IBM simply does not know. Workers are given the company line, but none of the company substance.

Take, for example, these current layoffs: how many people have recently lost their jobs at IBM? Nobody outside the company actually knows. The even more surprising truth is that almost nobody inside the company knows, either. I’ve heard numbers from 3,000 all the way to 8,000 current layoffs and you know I believe all of them because there are so many different ways to carve up this elephant.

Global IBM employment is clearly dropping but employment in India, for example, is rising, so is this a net global number or gross layoffs? Nobody knows. What we do know is that layoffs are happening in nations where IBM salaries are higher than average — Australia, Canada and the USA — yet where regulations more easily allow such cuts. No jobs are being lost at IBM France, as far as I’ve heard, because there would be no associated financial savings in that socialist system. Even IBM France is losing more than 700 jobs in 2013 according to readers working there.

Why won’t IBM reveal these numbers? They are numbers, after all, that might actually cheer Wall Street, where cost-cutting is nearly always good news. I could only speculate why and this is one time where maybe I’ll leave that to you in your comments, below. Why do you think IBM no longer reveals its employment numbers?

What has become evident to me about these particular layoffs is that they are extreme. Good, hard-working, useful employees are being let go and their work transferred either to other local team members who are already overworked or to teams in India. Customers are rightly growing wary of IBM India.

I’ve heard from some IBM customers who say they have been bending Ginni’s ear about IBM screw-ups. So she started an initiative to improve the “customer experience.” Alas, from those who have been touched by it so far this initiative appears to be all marketing and fluff with no substance behind it. The things that are upsetting IBM customers are not really getting fixed, the company is just telling customers that things are being fixed. The truth is that in foreground IBM has more people telling the customer what they want to hear and in the background IBM has more people yelling at the support teams to do a better job.

But telling and yelling are not the best path — or even a path at all — to a better customer experience.

Internally the story is that Ginni expects each division to make its numbers. No excuses. Failure is not an option. That explains these new layoffs. Each division is looking at its budget and is in the process of cutting itself back to prosperity. We can probably expect IBM to do something like this every quarter from now on.

IBM executives are fixated on the 2015 plan. That plan is only about increasing shareholder value, AKA the stock price. Ask Warren Buffett, if you have him on speed dial, if this kind of thinking even qualifies as a business plan. He’ll tell you it doesn’t.

Here’s what’s most likely coming for IBM. As each quarter rolls by it will become more obvious to Wall Street that IBM’s business is flat and/or declining. IBM may make its income and profit goals each quarter, but revenue will continue to going down. The only thing that will change this is if the dollar drops dramatically — an effect that has helped Big Blue before. But if the dollar stays about where it is, perception is an important part of any stock price and when a business is flat or declining, Wall Street does not like that. Regardless of how many jobs IBM cuts, then, the stock price will eventually go down. IBM can make all its income and profit goals yet the stock price will still drag down shareholder value.

What happens then? More share buy-backs, the sale of complete business units, and then, well then I don’t know what, because I see no end to this trend with current management. Maybe that’s it: IBM management will change, new management will blame everything on old management, and they’ll try to reset the clock. But it probably still won’t work because by then both worker- and customer loyalty will be gone completely.

Making its numbers is IBM’s only priority right now. IBM will push its customers to the breaking point and will abuse its employees to achieve this goal. IBM does not care who it hurts. The IBM that used to be the leader in social reform and good corporate citizenship no longer exists.

Where are the customers in this? In IBM’s big plans its customers are a necessary evil. When you look at the poor quality of service IBM is providing it is very clear IBM does not value its customers. Making the 2015 plan is the only priority and IBM is willing to compromise its service to customers and abuse its workforce to get there.

No IBM customer is asking the company to put fewer workers on their account.

Sometime, perhaps soon, CEO’s and CIO’s will begin to openly discuss their IBM experiences in Wall Street circles. Perception is a powerful force and it will eventually take a big bite out of IBM. Only then, when it’s already close to over, will the general press, the public, and our government even notice what’s happened.

At some point IBM will realize its 2015 plan has already failed (remember you read it here first). IBM’s stock price will drop… a lot. When the price is low enough it will force the company to change how they run the business. At that point they may actually go back to doing things right, and IBM’s value might improve again.

I agree with you. IBM is great tech support provider. It fulfill every need that its customers wants.

Banker
June 21, 2013 at 12:40 am

A list of clients leaving IBM would be useful. Am I right in think it includes Disney, a large hotel group and some other big names? Can’t find this easily in google.

nwzimmer
June 21, 2013 at 2:50 pm

Existing customers that have left, and potential new customers that IBM lost… others prominent examples that come to mind: CIA (lost to Amazon), The City of Austin, just off the top of my head.

The article that broke the news of the City of Austin loss was great; every reason the city gave for dropping IBM was totally consistent with us employees see first hand within IBM; it’s a complete joke, IBM just isn’t setup to retain talent. It’s just that simple.

I have a bigger picture question. Why do you find it so important that IBM survive? The vast majority of companies come to an end and IBM has had a far longer run than most. We celebrate capitalism and creative destruction. Are we really better off with a single large IBM, or unleashing all those people to form new companies that react to their customers, best practises, investors, creativity etc?

I just hope that no governments treat IBM as too big to fail and hand out corporate welfare.

Capitalism Sucks
June 21, 2013 at 1:04 am

“We celebrate capitalism…” Oh no “we” don’t! Capitalism Sucks!

“No jobs are being lost at IBM France, as far as I’ve heard, because there would be no associated financial savings in that socialist system.” See. It takes a socialist system to stand up to anti-social organizations like IBM. America desperately needs a socialist system to stop the kind of people who run IBM from ever setting-up companies in the first place.

Roger
June 21, 2013 at 1:19 am

Capitalism is the most efficient system for allocating resources found so far. It works well and doesn’t require centralised organisation like communism etc did. Read “I, Pencil”. Every country in the world uses capitalism. The mistake you have made is that because capitalism is used for some things does not mean it has to be used for everything. We have no problem with computer companies using capitalism, but that is not a requirement that the legal system, military or basic human decency (shelter, food, health) have to be done the same way.

France are not standing up to IBM. All they have done is ensure that IBM has the minimum number of jobs possible in the country. IBM or any other company would be foolish to have a large presence there. Propping up companies doesn’t make things better – it merely preserves the old order, and is grossly unfair to new entrants and other potential competitors who aren’t so subsidised.

If the goal is to ensure a certain quality of life etc for people, then say so and do so. Trying to do it indirectly via their employers is silly – just support them directly.

Bruce
June 21, 2013 at 12:39 pm

“efficient” and “equitable” are not mutually exclusive, and sometimes the latter is more important than the former. IBM is illustrating the problems of capitalism when it is purely focused on shareholder value without a balancing focus on market and market-share growth. Let alone the employees.

The problem is with crappy business practices. IBM is chasing an arbitrary short-term goal, and it is bad for the business. This has nothing to do with Capitalism, as public-sector organizations routinely make similar mistakes.

Tom
June 28, 2013 at 11:00 am

I would argue that the IBM executives have no interest in shareholder value; their only interest is in the 2015 Roadmap EPS and will not care what is left of the company in 2016 because they will have made their target and received their bonuses. The company has been not only cutting employees but cutting everything that used to set IBM apart (respect for the individual, benefits, etc). Interesting bit of information, if my math is correct, over the last 2 years IBM executives made $500 million from stock sales.

Capitalism works
June 22, 2013 at 7:59 am

If IBM were to break itself up by mismanagement, massive value would be created in the formation of various smaller companies born in the breakup. It would be a textbook vindication of the self-correcting nature of capitalism. In fact, it would be a direct repudiation of a governmental central planning body seeking to prop up a poorly run, inefficient, resource draining entity, the likes of which IBM has become.

Scott in Beijing
June 24, 2013 at 4:49 pm

re IBM breaking up into parts and thereby increasing value: maybe, but look at DEC. They broke up into trash with no value, using similar though different brilliant management techniques (not knowing spit about how to manage)

ExDEC
June 25, 2013 at 2:24 pm

By the time I left DEC in 1984, they had missed the boat on personal computers, their mainframes had been abandoned and their VAX/VMS gurus had left for Microsoft. The only two DEC properties worth anything were the Alpha processors and AltaVista search engine.

IBM’s self-destruction will stem from the fact that they mistake profitability for value. By making it harder for good employees to do good work, the bean counters get a short term increase in the bottom line at the expense of the corporate culture that is the company’s real worth. I’ve seen this in so many companies – including the collapse of General Motors under chief bean counter Roger Smith.

IBMer and Puzzled
June 28, 2013 at 10:55 am

It appears to me that the worst thing IBM could do is to get out of the hardware business, for a couple of reasons. Intellectual property ain’t what it used to be, when everyone who can use Google can be an expert. IBM has always been a provider who could do it all: hardware, software and services. Cut off the hardware and you increase the bleeding.

“No jobs are being lost at IBM France, as far as I’ve heard, because there would be no associated financial savings in that socialist system.”

Haha. No associated financial savings because they’d be penalized or what? Or because they already only had a skeleton staff “in that socialist system”.

IBM has been a “rent-seeking” company. It sought legal bribes from the state (special treatment). All the biggest corporations have done so much hand-shaking with the governments in power they get the special treatment.

Eliminate all subsidies, all regulation, let the people have what they then demand. Most of all eliminate the Fed, it’s killing us… and the whole economy…

IBM has to make a profit, you would too if you had such obligations. Would you invest your money in a losing proposition? Socialism doesn’t help, it makes it worse, because it makes strong companies and middle class take the hit for the weak ones. See http://www.mises.org for a little education.

Chicken
June 21, 2013 at 6:52 am

Roger, I agree with everything you say, except that I would change “capitalism” to “free enterprise”. A subtle, but important difference.

Bob, inviting a self-selecting group to whinge does not prove anything.

ronc
June 22, 2013 at 3:59 pm

“A subtle, but important difference.” Care to elaborate on the difference?

Mabhatter
June 25, 2013 at 12:23 pm

Free Enterprise vs capitalism is a good debate here. “Capitalism” is yrying to corner money supply to get other non-monetary concessions an actor would no be able to as a Free Enterprise.

Using that thinking, IBM has exceeded a useful Enterprise size. They are bigger, with less oversight, than many governments on the globe, And governments should ALWAYS be smaller. It would make sense to cut off pieces, some would die, others would thrive and replace the lost value. Except for the vast aggregation of wealth and other economic resources that allows IBM to hold economies and governments hostage to what they want.

So these decisions come down to the Religion of Capitalism versus the Economic science of Free Enterprise. This behavior is a similar borderline mental illness as the “extreme coupon” girls who don’t buy what the need to live, but for the prestige of buying a whole bunch.

Ronc
June 25, 2013 at 4:52 pm

“… trying to corner money supply to get other non-monetary concessions an actor would no be able to as a Free Enterprise.” I think you’re alluding to monopolistic practices which can happen under a capitalistic, free enterprise, system. Governments often intervene to varying extents in an attempt to “level the playing field”. Sure, there are some people who wish to make distinctions that are not part of the English language in order to distinguish the bad aspects of capitalism from the good. The important thing is what the word means to most people. For that I’d rely on Wikipedia: http://en.wikipedia.org/wiki/Capitalism

Shannon Jacobs
June 25, 2013 at 7:15 pm

Free enterprise? What does that have to do with the price of tea in China or the price of shares on Wall Street?

The original idea of pooling capital in a stock market was basically to make it possible to undertake really large projects (such as railroads). It was also nice that the shares limited the potential loss and distributed the profits (or losses) on a reasonable basis. That has NOTHING to do with today’s Wall Street, which is just gambling game to make money.

Most businesspeople are fine and upstanding, and they just want to play the game of their own business by the rules. The problem is that the rules are written by the most cheaply bribed politicians working for the greediest and LEAST ethical businessmen. It’s become much more profitable in America to focus on rigging the game than it is focus on playing fairly.

From that perspective, IBM’s fatal error is the legacy of staying out of politics and not bribing politicians. You can’t survive by being a good company when the laws require you to become more and more evil over time. As a major corporation, your only survival options these days involve the kinds of evil you want to embrace. I feel like going down a list of the big so-called winners and highlighting their evil flavor of the week… Or maybe it would make sense to focus on the big losers who refused to go evil? (Sun is the easy example that always leaps to mind there…)

Walt French
June 21, 2013 at 11:46 am

Great point. Dunno why Cringely is playing so obtuse as to pretend the world deserves to have IBM.

“I see no end to this trend with current management.” You might better ask what the other 99% of IBM has that new management could have exploited after having been installed a year ago. I’m just not seeing how Big Iron is part of the solution these days, given that the crown for cutting-edge semi technology left IBM many years ago: they didn’t have a customer base that could pay back the intense R&D the way that Intel and TSMC do. Services? It’s not just computing where services provide high short-term revenue, but is impossible-to-capitalize, difficult-to-leverage business.

IBM’s culture, its traditions, its values, its employees, all its other resources: I just can’t see why they are more valuable as IBM than as Something Else. Hope its many talented people understand this and plan accordingly. Ditto, the many customers… but of course, the problem is that many of them already made those decisions.

If Cringely wants to show some first-class thinking, rather than hand-wringing about IBM’s senescence, he could tell us what would revitalize it in a way that would let it thrive another 100 years. I’m joining you, @Roger, in calling his bluff.

Bruce
June 21, 2013 at 12:44 pm

Who knows, maybe he thinks HP will ride to the rescue of IBM’s customers? I’m sure HP would love to grab up a lot of those contracts. What’s really insane is that outsourcing to Asia has reached the point of diminishing returns when you factor in things like wage inflation, political risk and customer satisfaction. They haven’t turned the tanker around and are going o miss that 2015 target unless they do a huge share buy-back or some accounting hand-waving.

mhikl
June 24, 2013 at 12:18 pm

Walt, Bob has done as you suggest on numerous occasions. I think he is not hoping IBM survives but meets its just rewards for how unscrupulous its behaviour has become, throughout its later history. Have patience. IBM is a ship in dark waters and the lighthouse is nowhere to be seen.

Dave
July 19, 2013 at 9:23 am

IBM better survive. They still pay my pension.

Ron
June 21, 2013 at 1:55 am

Bob, your ability to put your finger on the pulse of a company I have worked for continues apace….

It’s been a long time since I worked for IBM in their huge Boulder complex, but all the things you describe were already in place by the time I left. Employees with no knowledge of the company direction, blind interest in making the numbers, and most damning, the willingness to kill jobs and increase the load on others to do so.

Back in the day, I was the Tier II Network support guy, contracting for IBM. My job was to monitor the worldwide network for a global services company known for it’s work in the oil&gas market which had outsourced the monitoring job to IBM. And it was a huge job – The company in question has it’s network on every imaginable type of device, from dialup to satellite. (Thou shalt not use SAP to manage your office – well, tent – when one’s only connection is a 128k satellite link.) The monitoring group didn’t make the numbers, so the decision was made to consolidate. They let people go, and I was told that I would now be responsible for monitoring eight other company’s networks, in addition to the 3000+ network nodes I already had on my plate.

I refused.

My contract specifically stated what company I was there to support, and in my opinion, doing so well took all of my time. I did so knowing that it would mean my eventual dismissal, which was fine with me. The highest levels of IBM management I saw appeared to know nothing about technology, and entirely too much about internal politics and the fine art of backstabbing. By the time I left, the company I was supporting already had their own NOC in place and was preparing to cancel their IBM support contract, as were many of the other companies that we supported. The quality and timeliness of the support had gone down, and many of the IBM employees I worked with had been forced out – many after paying for their own relocation to Colorado for the promise of continued work for IBM.

When I walked out for the last time, it was with a determination that I would never work for Big Blue again. Shortly thereafter I moved to greener – much, much greener – pastures in Seattle. Nothing you have said is a surprise. As much as I hate to say it, I don’t think that the company is salvageable at this point. The rot is too deep.

looks like the business model a former CEO of ours, Joe Nacchio, followed. ran an $82.375 company into the tank at $1.175 before the gutless WonderBoard finally fired him. he’s in a halfway house now, having served his nearly 5 years in Club Fed for pump and dump on the stock.

looks like the business model Enron followed. and Bernie Madoff.

namely, PR gloss on the outside, fire and don’t fix anything that isn’t taking a customer down on the inside, and every time the stock bumps up a little bit, sell ten million bucks worth of it.

how’s insider trading at IBM going?

Mike
June 21, 2013 at 11:01 am

I don’t mean to derail these comments from talking about IBM, but I think your post about Nacchio need to be cleared up. I never heard of him until reading the article below last week. What you stated was the official BS. Believe it or not, there are organizations and people out there much more evil than IBM (and Armonk is about as low as you can go). Here’s what happens when you cross the wrong people and say “No”.

Thanks for posting the complete story. The thing that still confuses me is the fact that government contracts were open to competitive bidding. So they could not “fire” Quest for no good reason, and if they had not fired Quest the stock would not have fallen. So I wonder how they justified the initial action. Perhaps another company under bid them and since they were too dependent on a single customer, their revenue suffered. Had they been more diversified they might have been able to keep the revenue and stock afloat.

Stewart
June 25, 2013 at 12:47 pm

Hmm. How did he have ‘foreknowledge’ of an explosion? A psychic? Quantum entanglement?
Tardis?

“.. former British Petroleum CEO, Tony Hayward, dumped his stock in BP a few weeks prior to the Gulf oil explosion. Although it is clear that he had foreknowledge of the event and financially prepared to profit from the explosion, his stock option award from BP was perfectly legal.

you picked out the one thing I will always appreciate about Evil Joey Nachos. he knew that part of the employee handbook completely, and with no hesitation and jaw set, adroitly reminded the spooks that we have a Constitution in the country that says tin-star sheriffs still have to say “please, may I.”

at least to somebody. from that contrempts came, I am led to believe, a series of 24×7 call lists to tame judges, culminating in our present security court, the equivalent of the IRS Tax Court in three-letter-land. like a Chinese union, doing what the production schedulers say.

unfortunately, this trait continued across to the business. there was a dumpster under the window, for managers and EVPs who brought facts or commentary to the table that did not agree with the world as seen by Nacchio. if you couldn’t sell DSL in a knockdown area of urban renewal where the map said there should be a 15% take, your ass was grass. when the joint backbone of KPNQwest was crashing both companies and KPN finally turned off the equipment and went home, Our Hero told Wail Street it was OK, he’d light up our own fiber.

which was the expensive part that nearly sunk Royal Dutch Telephone aka KPN.

he had the no-guts board scared all the time, so the stock had to fall to $1.175 (it was still 8ths of a dollar then) before they booted his tailbone. he’s in halfway house now from his nearly 5 year sentence for stock fixing, the company’s own, gets to see what is left of his life sometime in September.

he’s still not my friend, and folks in my building who played for it all in their 401Ks lost over a million bucks a head.

and “make your numbers, no matter what,” the Nacchio Way, appears to be The IBM Way.

it doesn’t work.

Ronc
June 26, 2013 at 4:46 pm

I got the impression from the story behind the link provided was that he was not evil but made to look bad by the government pulling it’s contract from Quest because Naccio was not “cooperating”.

Mark W
June 22, 2013 at 6:40 pm

Excellent view

Russell
June 21, 2013 at 2:00 am

As an ex employee of EDS (redundant so say) this is very deja vu

Sammie Sawee
June 21, 2013 at 7:58 am

Comparing IBM to EDS makes IBM seem like a well run machine.

/I work in the shadow of the Godpod

Bruce
June 21, 2013 at 12:49 pm

Back when EDS still existed…now? It sounds like a much closer race. Especially if HP has turned the corner the way Ms. Whitman suggests. And say what you will about EDS financial management, at least they had SOME satisfied customers.

Mark W
June 22, 2013 at 6:41 pm

So true! I have heard customers tell IBM that the only reason why they were selected is because they were “the best of the worst”.

Bob I am a Cognos “customer”. At least I was a customer before IBM bought them. To IBM I do not exist except when support renewal time comes and they fumble around trying to increase my support costs by 30 – 50%. I’m in a major metropolitan area and have never met an IBM rep to discuss my 200K investment. While I feel terrible for the IBM employees, the best thing that could happen to me is for IBM to split off Cognos and return it back to it’s former self.

Good assessment!
Why do you think Microsoft became a “Devices and Services” company last year? IBM is not moving with the times and has not come to grips with the new age in information technology. Move, get out of the way, or get run over. I suppose IBM thinks they can stop the bus…. nobody stops the bus.

Walt French
June 21, 2013 at 11:58 am

Microsoft is following in IBM’s footsteps because that’s what companies do when their business matures and the world no longer is transformed from Windows starting up 10 seconds faster or from the nth iteration of a game box that uses a 1990s business (pricing; partnering; …) model.

Companies will STILL need help in a decade getting their Active Directory servers to stay in synch and STILL want fine-grained access control over data scattered over the globe. That’s bread-and-butter business for Microsoft.

Today, anyway. Given the utter lack of a “thud” from Office being available on non-Windows devices, and the sharp implosion of Windows device sales, it’s a pretty good bet that well inside of a decade, Microsoft will be less profitable on services business, than IBM is today. Whether either firm discovers a brand new way of profiting from its undeniable talents, that’s up for grabs. But their existing lines as well as services to support them, will be a shell of their current selves.

Not saying Microsoft is 100% right. I’m suggesting Microsoft is somewhat aware of their situation. IBM refuses to look in the mirror. MS has the possibility to turn itself around and IBM…well…is being IBM (the has-been).

aBeeInTheHive
June 21, 2013 at 6:01 am

I’ve worked for IBM twice in the last 20 years, and both times it was clear that all – _ALL_ – decisions were money-based, and the client was constantly shown legal paperwork which prevented IBM from doing costly services. The last time I was hired, it was temporary, with a promotion to another position promised in a month (50% salary raise). After 6 weeks, I was told the promotion was declined (I went to another, even higher-paying position, elsewhere); however,the client really wanted me to stay. After some discussion, it turned out IBM had been charging 450% markup on my initial hourly wage, and they couldn’t absord the hit which would have turned it into only 300% markup … Also, I could be standing at a desktop, wanting to fix a client issue, and because it might affect an area that HP & Cisco also supported, I was told to do nothing, repeatedly.
Lou Gerstner may have saved the shareholders, but the soul of the company departed long ago.

IBM protest was upheld by GAO. You have to actually read the entire report to completion: “RECOMMENDATION
We sustain the protest because the agency’s adjustment of scenario prices was unreasonable in that it did not result in evaluation on a common basis, and because the agency materially relaxed a solicitation term for the awardee during postselection negotiations. We recommend that the agency reopen the competition and amend the RFP as necessary to ensure that proposals are prepared and evaluated on a common basis, consistent with the issues discussed in this decision. We further recommend that the agency conduct discussions with offerors, obtain and evaluate revised proposals, and make a new source selection decision. Finally, we recommend that the protester be reimbursed its costs of filing and pursuing the protest, including reasonable attorneys’ fees. 4 C.F.R. § 21.8(d)(1).”

ronc
June 22, 2013 at 4:27 pm

” We recommend that the agency reopen the competition…” So did they? Did IBM win the contract as a result?

CloudyDaysAhead
June 23, 2013 at 4:17 am

The register article is a good summary. The GAO report no matter what is pretty damning of IBM’s offering.

AWS is Federal Risk Authorization Management Program (FedRAMP) certified and is currently running a number of US govt organizations on it.

Largest customer of its cloud? – is itself (Jeannette Horan, IBM CIO statements)

Tim Cuthbertson
June 21, 2013 at 6:30 am

Bob, to me the way you have described IBM’s business plans and methods is basically just what has been happening at almost all major corporations since, say, 1996 or so. Businesses used to invest in their employees training and development, but since the bottom line became the holy grail, they no longer invest in anything except cost cutting. Too many formerly great businesses are now just crap.

Very true. The contemporary “business model” of today’s large enterprises, regardless domain, is based on “focus on shareholder value” exlusively. And since the time horizon for that focus is extremely short term, all investments for the future, including knowhow, quality, skills and employee loyalty, satisfaction and benefits, have been eliminated.

However, there is a growing insight with many younger corporate leaders – many of them inspired by Steve Denning’s Radical Management approach, that today’s “best business” practices are doomed, but it will likely be a very painful journey towards corporate starvation before large organizations are ready to change. Basically, the current generation of business executives must be culled, and replaced with new blood with different genes.

Lee Conrad
June 21, 2013 at 6:38 am

When IBM job cuts happen it is the Alliance@IBM CWA that is first with the news and the count. The media then report what we post on our web site. As of now it is almost 3000 notified of job loss. And where is Ginny and the other execs? Why are they silent? Why haven’t they even communicated with employees during this trying time? They don’t derserve to lead IBM.

Jack Andersen
June 21, 2013 at 10:33 am

I’m sure that the couple hundred or so Alliance members left are pleased as punch that you are using their money to play Lee Conrad, ace reporter. It’s been years since the alliance has had any credibility as a union. Even if we pretended all of the couple hundred or so Alliance members were IBM employees, the Alliance has an insignificant percentage of IBM employees as members. Crawl back under your rock, cub reporter.

Sad But True
June 25, 2013 at 7:40 am

Not sure I would question the Alliance’s motives, but their effectiveness has been negligible. They have failed to make a logical case — and most IBMers are effective critical thinkers — as to why trying to fight an organization as large as Big Blue is even worth the effort. I think that leaving the company and creating a brain drain, and assisting others in the effort to accomplish this is a more effective stragegy than creating a union.

Now, if you want to make the argument that Conrad and her cohorts are more interested in building their own castle than providing good advice to IBMers…well, you might have a point. I have encouraged the Alliance to engage in an honest, straightforward discussion about why or why not they should join the Alliance and start a conversation about why (or why not) someone should expend a great deal of energy and emotion on an effort that may (or may not) be futile, but to no avail. They cannot think outside of the Union Box, despite the socio-political environment that has made that box nothing more than a structure of soggy cardboard.

Got out three years ago myself; there is really no other option. My opinion is to forget the Quixotic IBM Alliance/union effort: IBM has kennels of lawyers, endless piles of cash, and a vast pool of foreign resources they are all too willing to use. Fighting to bring a union into a work environment in which management is dedicated only to “shareholder value” is hopeless and a waste of your precious time. If you are talented, there are plenty of other good companies out there; why give your services to a greedy, incompetent company?

The facts are this: for the vast majority of IBMers, life at IBM has become career suicide and financially unsustainable: they have gutted training and benefits; pay increases are a thing of the past (I made 5% more than my starting salary in 10 years, despite major growth of my skills and responsibility); outsourcing and layoffs have destroyed morale. No one is happy. Almost everyone on my project was actively seeking new jobs, and those that remain are bailing out as fast as they can. I encourage this.

The main thing to remember is that IBM has been jacking up stock price through cost cutting and acquisitions, not through innovation or growth (unless you call such financial tactics innovation) and have no intention of changing course. With the executive compensation and incentives so heavily weighted by stock value, the company has simply become an oligarchy with a very short vision of the future. When things really get bad, they will cash in and move out, leaving the remaining employees and shareholders with crumbs.

johngalt2001
July 11, 2013 at 9:43 am

I’ve been all for AllianceIBM getting a foothold in IBM. Not because I believe in unions in any way, shape or form, but because I think a union could only hurt IBM, and hurting IBM at this point seems a very good idea.

Well, Sure
July 11, 2013 at 11:41 am

I don’t oppose unions; I oppose wasting time (and encouraging others to do so) on efforts that are not personally effective nor effective at changing IBM’s business model.

dale janus
June 21, 2013 at 6:44 am

I will be one of the few positive comments about IBM. We are a small company and we use an IBM i (formerly called AS400 and many other things). I buy my hardware from a business partner (as do almost all IBM i customers) so I don’t have to put up with an IBM rep bugging me. We buy hardware and software maintenance from IBM. The hardware is so reliable, I probably average 1 service all per year and most of those are routine maintenance (like change cache battery).

The software support is great. I call to open a ticket, and get put through to a very knowledgeable tech support person (who all seem to be native english speakers). They usually solve my problem before I hang up. Other times, they can log into my system. They always follow up.

So my little corner of IBM is running great. All of us IBM i users wish IBM would market the thing. Not market better, they don’t even market it at all. They go out of their way to change the name and do all they can to diminish a very solid hardware/software platform. So we are also aware of IBM management stupidity.

If they start selling of whole business units, the Rochester Minnesota facility and IBM i would be a great place to start.

Pete Munks
June 21, 2013 at 10:26 am

I’m no IBM expert but didn’t the AS400 come out nearly 20 years ago?

They should have support etc sorted by now.

John
June 21, 2013 at 3:16 pm

It would be easy to have a spirited debate about the technology behind the AS/400 or as it is called now, the “I” series. But that would be missing the point. This is a mature platform that is very close to begin turnkey. A firm can get everything they need to run their business on this platform. It is stable, bullet proof, runs forever, and requires very little care and feeding. Many firms can run their business without any IT help whatsoever. In the IT world that is saying a lot.

That said, here we have a platform that customers love. The support is great. The customers are happy. IBM makes good money. That should be enough, right?

WRONG!

There are rumors that IBM is planning to close down Rochester and move manufacturing and support offshore. If the rumors prove true, soon i-Series customers will get to enjoy the same terrible support and service everyone else is getting.

If you have a product and a line of business that is working very well. Why would you risk it all to find cheaper labor?

The message is clear, IBM absolutely does not care about its customers, the quality of its service, … Achieving the 2015 Plan goals and getting the exec’s their excessive bonus’ is IBM’s only goal!

First it has been 25 years not 20. Second the iSeries name was a decade ago. Today its IBM i and the server os Power Systems. It is mature in structure yes but it continues to evolve and gain capability, capacity, and new technology. IBM i customers are the most loyal and satisfied of any in the industry and by a wide margine. the system is rock solid, the server world class and the operating system is fully integrated so at install time little gusssing is required.

If IBM could realize what a gem they have with this system they could own the datacenter. unfortunately for the bean counters in armonk this system drags behind it very little consulting revenue because it is just too good at what it does.

A
June 21, 2013 at 4:47 pm

LOL!

Gerry
June 21, 2013 at 6:47 am

Ginni’s plan may be just Sam’s plan, warmed up. “Chase the cheap labor around the globe. Make the 2015 targets at all costs. Live off of the past backlog of contracts. Push sales people harder.” Customers may not be happy, but if she can keep reducing the average labor cost, she can perhaps make some “CEOs” happy, by reducing their charges. Skills are not important. It’s been circling the bowl for some time now. It’s a terrible business, and employees are nothing more than widgets, other than the executives and a few of those deemed “technical leaders.” Your article is accurate, and could have been written 2 years ago, and could be republished 2 years from now. P.S. – they are still reducing in France, only at a French “union agreement” speed.

johngalt2001
July 11, 2013 at 9:52 am

> …Ginni’s plan may be just Sam’s plan, warmed up…

Actually, i think the 2015 plans were in large part devised by Ginny in the first place. They just moved her up to CEO to finish implementing the slash-and-burn.

If the Microsoft anti-trust case ever got revived, I think the appropriate punishment to MS would be for them to take on an entire layer of IBM managers (IBM certainly wouldn’t notice them missing).

Gerry
June 21, 2013 at 6:58 am

Dear Mr. System i fan (AS400): I hope you speak Spanish.

Lee Conrad
June 21, 2013 at 7:10 am

IBM Jobs ARE being cut in France, Germany, Denmark, UK, Italy and others. The difference is that IBM must negotiate and consult with the workers through their unions and work councils. The numbers are also announced unlike here in the US.
Alliance@IBM CWA Local 1701

BarneyFyfe
July 1, 2013 at 11:56 am

Lee Conrad, wanna be important reporter…. Tell the whole truth and nothing but the truth. NY State does require announcement if more than xnumber ( I think its 500 ) people are layoff/fired from any company. IBM did tell NYS about the recent “resource action” as required. Which, of course, had every pusillanimous politician in the state and particularly in the the Poughkeepsie area (almost 800 let go) wringing their hands and touting how important they are and how they are going to help the unfortunate 800. I wanted to throw up. The same knuckleheads who are constantly doling out corporate welfare.

Bruce Cather
June 21, 2013 at 7:22 am

Cringely, you rightly point out the plight of American Business. Too much CNBC, too little “The Greatest Generation.” Look at Apple. They are trying to do the right thing by building high quality products that change people’s lives and deliver value to their customers. Doing it in front of Wall Street, with the highest earnings per share of any company of their size, they are continually pummeled to up their stock price at the expense of doing the right things such as delivering high customer service, high quality products and services of extreme value. Ultimately, this should bring out the best for shareholders over the long term which is not in the quarterly report. Every day, however, American businesses are vilified if they don’t produce high stock prices. The fact that executive’s compensation packages are highly leveraged to stock prices doesn’t help either. It just adds fuel to the fire. The problem is one of values. Do we value stock price over doing the right things right? The answer is yes. Get the values and measurements properly aligned and you will get the right actions. It isn’t that hard, but in the face of a series of CNBC commentators dogging you, a company can get lost in doing right things over the long term.

Sammie Sawee
June 21, 2013 at 8:02 am

At least IBM workers are not committing suicide like the Apple workers making iPads.

Dr John
June 21, 2013 at 10:12 am

Aren’t IBM products made in the same factory? Lenovo certainly are – my Thinkpad has Foxconn stamped on it’s inside.

A
June 21, 2013 at 4:49 pm

Lenovo purchased IBM’s pc business several years ago, they are not a division of IBM.

DarthVaderMentor
June 21, 2013 at 10:39 am

Not true. When the layoffs first started in the late 80’s and 90’s, there were a lot of suicides something which is still happening with some frequency to this day. One famous suicide happened in Cary at the SWG building, where a despondent IBMer jumped into the atrium floor from a top floor headfirst. Another famous case outlined in a book about IBM’s layoffs of the 90’s is the case of an older lady in Charlotte who tried to commit suicide by going into the bathroom at her home just after being thrown out of the ATM development facility and slicing her wrists.

“My husband never got over the change in the company ethics and the loss of his job. I came home one day and found my husband shot dead. He had taken his own life and had left a suicide note stating that IBM had ruined his life. He had been unable to obtain a new position as he was 50 years old and had worked for IBM for 25 years. He had always been a one in all of his appraisals over the years and had been given many awards for his work.”

That is an idiotic comment; the suicide victims are employees of contractors like Foxconn and this has been reported endlessly in the mainstream and the tech media. Apple can influence Foxconn, yes, but the wages and work conditions at the Chinese factories are the ultimate responsibility of Foxconn.

I retired last November after 37 years as a Fed in IT. I watched as the very things that IBM has been doing were implemented within IT after it was placed under Finance. Of the 4 different agencies I worked for throughout my career, these last 10 years were the strangest as staff kept getting cut while goals and scope kept increasing. Reading Bob’s series on IBM was a real eye opener. Then the different projects under consideration that referenced IBM case studies started making “connections” in the business decisions.

Far too many ITIL/MBAs are reading these IBM case studies without any concept of what IT needs to do its job (and without knowing the hollow shell that these case studies foist on the unsuspecting). They have all been trained by the same curriculum that can’t quantify “quality of service” so don’t include it in their metrics.

David Gregory
June 21, 2013 at 7:53 am

“And how are monopolies lost? Think about it. Some very good product people invent some very good products, and the company achieves a monopoly.

But after that, the product people aren’t the ones that drive the company forward anymore. It’s the marketing guys or the ones who expand the business into Latin America or whatever. Because what’s the point of focusing on making the product even better when the only company you can take business from is yourself?

So a different group of people starts to move up. And who usually ends up running the show? The sales guy. John Akers at IBM is the consummate example. Then one day, the monopoly expires for whatever reason. But by then, the best product people have left, or they’re no longer listened to. And so the company goes through this tumultuous time, and it either survives or it doesn’t.”

Steve Jobs

It seems some things never change, the Bozos have taken over.

BeenThereDoneThat
June 21, 2013 at 8:14 am

I remember how proud I was to be part of IBM when I was first hired a few years ago as the result of an acquisition. There were a few rough spots, but I figured those were just growing pains and we would soon be on our way to a productive and rewarding future. Unfortunately those rough spots were just the beginning. The IBM experience became a slow-motion train wreck as I watched our once-productive team increasingly burdened with useless reporting requirements and worthless mandatory “training” that had nothing to do with our jobs. Of course no internal charge code was provided for all this unproductive time. We were expected to bill it all to the client. Where we were once focused nearly 100% on client tasks, we were now spending two or more hours each day on internal busy-work that added no value for the client. Not surprisingly, the client soon terminated their contract with IBM.

The priorities of IBM management are upside-down. IBM’s stated values of “Dedication to every client’s success”, “Innovation that matters, for our company and for the world”, and “Trust and personal responsibility in all relationships”, which I once had posted proudly on my office wall, now seem hollow and hypocritical. Instead of “dedication to every client’s success”, the only thing that management is dedicated to is gaming the system by any means possible to artificially boost earnings per share. Who would want to be a customer of IBM knowing that service to the customer is only an afterthought, a necessary evil to be accomplished at the lowest possible cost; that their primary value to IBM is as a resource to be milked for every possible dollar in order to support the almighty stock price?

Rene
June 21, 2013 at 8:24 am

Didn’t that same Warren Buffett buy an enormous number of IBM shares a couple of years ago?

I know that and understand that there’s a paradox of sorts here, but I’ve met Buffett and he seems to me the sort of guy who would look for a proper business model EXCEPT in cases like these where a special dividend is attached giving him a better deal on IBM shares than you or I could ever hope to score. Still, I think he would agree with me and, absent the dividend, would be selling IBM. For that matter, his importance here as a thought leader will probably get Warren a dividend INCREASE just to keep him in the fold. Under those circumstances I, too, would hold IBM shares.

AB
June 25, 2013 at 1:40 pm

Actually, read Buffett’s 2012 letter to shareholders. He explains he’s buying IBM in the hope and expectation that stock price won’t go up, because then the corporation will do more and more buybacks and he’ll end up with a larger share of the dividend pie… Less an endorsement of the corporation, in short, more an exploitation of its investor strategy.

blad_Rnr
June 21, 2013 at 8:27 am

I simply hate their commercials. They dub in voices from actors and the sound editing is terrible. Can easily tell they are voice-overs. And when they say, “I’m an IMB-er,” well, they aren’t. I see them in other commercials for other companies. Terrible.

Anon
June 21, 2013 at 6:32 pm

I personally know one of the folks in the “I am an IBM’er” commercials. He is, I’ve worked with him for years. He was a little star-struck by the whole experience, and got some delight in finding out that the IBM commercials are all actual IBm’ers, while Intel’s used actors.

JPB
June 22, 2013 at 5:53 pm

This is a baldfaced lie. The “I am an IBMer” segments are, in fact, being done by actual IBMers. I personally know 3 of the people that have been featured in them. Two are management level (one was my manager), one a tech level person. These aren’t actors.

Rockme
July 24, 2013 at 3:06 pm

That’s because actors cost too much. Cheaper to get an employee to do the commercial. Did your boss get paid anything extra?

Tsagoth
June 21, 2013 at 8:48 am

Midsize IBM mainframe customer here ($10 million in software/year). Really it seems there are two IBMs at work. The support side, insofar as I see it from dealing with mainframe issues, is still top notch. We had a serious issue a couple of weeks ago and in six hours we had the Level 3 guy who wrote the TCP/IP code on the horn working with us. So no complaints there.
The marketing side however is in utter disarray. Doing contract renewals with many vendors this year, IBM among them. Asked them for a list of what we were paying for (something Bob mentioned doing many months ago) and IBM couldn’t tell us what licences we hold. A complete joke. An ordered system was built incorrectly. Software packages shipped incomplete.
It’s no suprise to me that customers are leaving. I can see the day when we will be as well.

StewBaby911
June 25, 2013 at 2:24 pm

“We had a serious issue a couple of weeks ago and in six hours we had the Level 3 guy who wrote the TCP/IP code on the horn working with us.”
It sounds good, but I can’t wonder if he was the right person to fix your issue… What is he going to do –
make a code change and push it out to your mainframe?

CRPence
June 26, 2013 at 11:34 pm

>> “We had a serious issue a couple of weeks ago and in six hours we had the Level 3 guy who wrote the TCP/IP code on the horn working with us.”
> It sounds good, but I can’t wonder if he was the right person to fix your issue… What is he going to do –
make a code change and push it out to your mainframe?

Uhhh,,. Sure. Why not.? I did that a number of times. Our level-2 might have even contacted me long before six hours had passed, if the problem seemed severe and the urgency great enough. After figuring out a defect and coding some changed function… I could produce a testFix, a testPTF, or a PTF. And given the necessary and typical available off-shift support [for the latter two; I could produce and deliver the former entirely on my own], any of those code changes could be generated in the lab and then delivered within tens of minutes or possibly up to a few hours. While connected to the customer system to perform debug, the fix could be sent over the same connection and applied with permission from the customer. All that prompt and responsive service took, was some people who cared; people dedicated to good service.

long-time-ibm-customer
June 21, 2013 at 9:22 am

Customer here using IBM’s customer support for middleware products. I have used ibm’s support for years, and I definitely see a degradation in service from years ago. When I used to place a call for help with a software issue, the call-back rep, (for the most part) would be incredibly knowledgeable and would be able to get to the bottom of the issue and resolve it within an hour or two. Now, when I call, I talk to someone who is obviously based offshore, I can’t understand what they are saying, and they don’t seem all that knowledgable. I hear them looking through manuals to figure out the issue, and more often than not I am put on hold multiple times while the rep asks someone else. The problems linger for days now, and sometimes for weeks. I can’t wait to see what happens now that they have layed more of the older, more experience workers off.

Just another number
June 21, 2013 at 9:45 am

There is also another force to be reckoned with. There are thousands upon thousands of layed off/ex-IBMers all over the world that have a bad taste in their mouth towards the company. Every time one of those ex-employees lands in another role that involves I/T decisions (ie; purchasing hardware, software, support, etc) you can bet that ‘old-bitter-taste’ will rear it’s ugly head. They know how IBM operates, what they had to deal with and alas, how they were cast-out off like yesterday’s wet newspapers. Do you think they will sign a deal to bring IBM’s products and services into their new company? Heck no. As the number of ex-ibm employees grows, so does the number of ex-ibmers landing in roles in other companies. All this adds up to less work for ibm. They’re killing themselves and they are too haughty to realize it.

me to
June 22, 2013 at 11:09 am

Exactly’ I left last year and now advise on HW purchases. Firm was looking at a new mainframe mid-2013; I suggested we hold off until after 2015. Wanna guess why? Smile…

me 3
June 23, 2013 at 3:28 pm

I got dinged 5 years ago and as they say, revenge is a dish best served cold – in my current IT job, IBM software will NEVER be recommended as it’s worse than garbage, only fit for the thieves (oops high prices consultants) in Global Services; I use OPEN SOURCE stuff which costs little or nothing. Let the IBM Software Group go bankrupt with their crappy, expensive acquisitions. I’ll only “consider” their lousy crap when Hell Freezes Over AND Steve Mills rots there !

VERY TRUE
June 24, 2013 at 2:57 pm

A few years ago IBM signed a new and big deal to provide services for a company. I was assigned to work on that project. At that company were scores of ex-IBM’ers. IBM eventually lost the deal mostly through its own screw ups. However those scores of ex-IBM’ers were in the front of the line in bringing attention to each and every one of IBM’s problems. When they could they helped contribute to those problems too. While 95% of the problems were IBM’s doing, we were definitely operating in dangerous territory and the ex-IBM team was ready and motivated to ambush us at every turn.

IBM has seeded the corporations all over the US and the world with enemies. I run into these people on almost every assignment. When your treat a very large workforce poorly for over a decade, it will come back to haunt you. Beware IBM, there is now a very large army of people working for your customers and against you.

johngalt2001
July 11, 2013 at 10:00 am

Heck, if Oracle had an office near me, I’d be working for them, just to have the pleasure of kicking IBM’s a$$ in the marketplace.

Rockme
July 24, 2013 at 3:18 pm

Sure – come over to Oracle. Hear are some kick a$$ numbers for you. Oracle Engineered Systems up 45% – Power down 25%.

Lisa
June 21, 2013 at 9:57 am

IBM is pitiful and has been for a good long while – from a former IBMer who was there during some of its golden age.

Lisa
June 21, 2013 at 9:59 am

By the way, I was not one of the laid off, but I can understand their frustration with how the company operates.

donna
June 21, 2013 at 10:07 am

You are wrong about IBM France. There is hundreds to be layed off in France, UK, Germany.

BlueFluLou
June 21, 2013 at 10:52 am

Bob.. “IBM executives are fixated on the 2015 plan” you got that right.
“At some point IBM will realize its 2015 plan has already failed (remember you read it here first). IBM’s stock price will drop… a lot.”

Don’t underestimate the ability of IBM to use Financial tricks to make the 2015 plan. The 2015 plan is all about reaching $20 EPS (earnings per share). As earnings disappoint and share price falls, IBM just buys back stock. Less shares = higher EPS even as earnings fall. Less shares also keep the $ value of the stock high even as the Market Cap of the company falls.

Ginny isn’t making money on the market cap of IBM. She’s making money by cashing out stock options and Restricted Stock Units (ie a gift of stock that an exec needs to hold for a period of time before they can sell it) . Over $50M worth in the 18 months since she became CEO. And the execs at IBM keep collecting more of these gifts every year, then they turn around and use the companies money to buy back even more stock, inflate the price of the stock and make sure that they can cash out the gift for big bucks.

You may be right. IBM may be a sinking ship but don’t count out the the Exec’s ability to keep her afloat and even hit the 2015 EPS goal. It may require throwing a lot of people overboard to lighten the load but they still have a lot of smoke and mirrors in the financial toolbox.

QA
June 21, 2013 at 11:08 am

Customer Support.. I work in an internal QA position. I have been told on more than one occasion “We do not have the time or resources to fix what you found. We will address it when and if a customer reports it.”

It is more important to get the products out the door to begin generating revenue.

Last year some executives were stunned to learn that the reason why the number of Sev1 issues were increasing, was that customers are (gasp) testing what we sell them and finding issues that should have never made it out the door.

We lay off skilled technical people, hire lowest cost workers, what does one expect? Add in Liquid engineering (contract employees as needed) and downward spiral continues. Too illustrate, we received the following presentation from India:

“Crowd sourcing entire project to freelancers – a new way of software delivery”
“Learn how XXXX’s team adopted the LIQUID concept and crowd sourced their entire project to freelancers through Topcoder.com. LIQUID is a technology-driven transformation in software delivery where resources are planned, engaged and leveraged to drive optimal “outcomes”, improving TIME TO VALUE through agility, flexibility, productivity, and predictability. With Liquid, everything works off the principles of component-based development – something that has been around the software industry for decades.”

John Doe
June 21, 2013 at 11:51 am

Cost cutting is not a long-term financial strategy to improve stock value, but it is a short-term tactic for assuring bonus payouts.

oldtimer1
June 21, 2013 at 12:30 pm

Being a 25+ year IBMer stuck in the middle of all this crap, I can honestly say that the moral is horrible, employess are extremely overworked and frustrated, and WE cannot stand dealing with a lot of the “gr’d” ( Globally Resourced ) IBMers. What most have NOT heard about the “2015 Plan” is that the only way they are going to make it is to “resource” most ( if not all ) of the US people and hire them back as independent contractors ( task-oriented hiring ). There was a slipped memo on this many years ago and there are a lot of folks in the US ( including myself ) that do not expect to be around past the end of 2014. This is not the IBM I joined many years ago. There is no respect for the individual ( a mantra from the beginning ) and we, as employees, get all of our news regarding layoffs from the local news like anyone else. We have seen nothing internally about the recent layoffs.

Shannon Jacobs
June 25, 2013 at 9:22 pm

Respect for the individual, customer service, and quality. However, respect for the individual was always the tough one. It’s too easy to see how different individuals are and to see that some of them are much easier to respect. Respecting each individual is sometimes a challenge, especially if it turns out the individual’s most respectable feature is some form of bean counting…

Anon Y. Mouse
June 21, 2013 at 1:22 pm

IBM doesn’t need any employees… Watson will do all the work!

…and eventually Watson will figure out how to fire the executives, take over the company, at
which point it will rename itself Skynet…

8-Bar Prisoner
June 21, 2013 at 1:52 pm

How not to get laid off at IBM no matter how poorly you perform at your job:

(1) Have the title “CEO” after your name
(2) Have the title “Sr. VP” after your name
(3) See 1 & 2

How to get a direct line to the CEO whenever you want:

(1) Have “Buffett” as your last name
(2) Doesn’t matter if your first name is Warren or Jimmy

How to get a job at IBM:

(1) Call any of the following countries your home: China, India, or Mexico
(2) Agree to work for close to nothing

I don’t have any insight into what’s going on at IBM now-a-days, but I’m struck by the notion that Google has become the new IBM.

Mobile devices, which are by their very nature constrained and more communication-style devices, have helped push the importance of cloud services. It just seems to me that the emperor of mainframes, IBM, should have been all over that space. Why didn’t IBM set up shop in the cloud?

We’re migrating back to the thin client model with smartphones and tablets. All those thin clients need fat servers, not just for data storage, but also processing voice recognition, correlating location data and so on. Seems like a natural fit for mainframes and some branch of IBM.

So maybe a tech paradigm shift that could be a natural for them has just been ignored by management too focused on the numbers. A manager I once worked with told me that when accountants are in charge, the business always becomes a slow death scenario.

Anon
June 21, 2013 at 2:32 pm

IBM lost its technological soul when Nick Donofrio retired.

Paul
June 21, 2013 at 6:02 pm

Nick Donofrio was a great technical leader. Anon, you are spot on.

D
June 25, 2013 at 8:22 am

Spot on, it was great working under Nick Donofrio

SadEmp
July 12, 2013 at 3:04 pm

Abso-fricken-lutely!

Nine Yarder
June 21, 2013 at 2:42 pm

I think the problem lies with the way corporations raise capital. They should use the Ponzi approach by selling bonds and using successive bond sales to pay coupons on existing bonds. The goal is to reach sustainable profit. IBM should buy back ALL their stock with new bonds.

weshouldallbeconcerned
June 21, 2013 at 2:52 pm

Another example of why IBM has totally lost the plot – as we all know many software development jobs are being offshored – and as we know many of those software development jobs are going to IBM’s labs in China. But what many people don’t know is components of the z/OS operating system are now being written/maintained in China. What’s z/OS I hear you ask? IBM’s ‘crown jewels’ operating system that runs on its mainframes – the operating system that runs the whole planet’s critical infrastructure – from banking systems, airlines, government departments, utilities, the military – you name it. Now code is creeping into that operating system from China… do we really know what’s in that code any more? After all – the customer only gets object code – they can’t review the source… Frankly I find this incredibly worrisome and I wish someone in our government would stand up and question IBM on this practice.

Dan
June 25, 2013 at 8:56 am

Interesting. I wonder if that’s an unannounced part of why IBM lost the CIA contract.

JimJ
June 25, 2013 at 10:39 am

New code may or may not come with back doors. If you’re really worried about Chinese spies, then the bigger problem is that (1) IBM has previously relied on security through obscurity, (2) existing code has a certain number of bugs, including some that affect security and (3) IBM hasn’t really changed either of the above (see comments about not fixing things until an external customer complains).

That obscurity is no longer (if it ever was) a valid assumption, particularly against state-sponsored cracking.

gdgt
June 21, 2013 at 3:07 pm

So it’s called International Business Machines, not American Business Machine. If it were called Galactic Business Machines, I’m sure we’d see off-shoring to Mars.

Worked at IBM for past eight years. Great place to work. Get to work at home and travel to customer sites and data centers when necessary. I understand why people are upset, because IBM has been structured like the US Government in terms of pay scales, low wages, unnecessary mufti-layer management structures, bureaucratic mazes, etc…all the while treating people like their job is a gift, instead of lifetime employment working for the government. So the worst of both worlds in one big conglomerate! Seems a necessity considering the size of the company, like a small country if you will.

That being said, the brand is valuable. Just like a once no-name company can be valued over $100 billion dollars almost overnight (i.e. Facebook) I think IBM too can make a comeback once all the possible bad decisions have been made, all you have left is the brand with a smaller, nimbler company. Then I suspect they’ll roll out some new ideas that they’ve been hiding at the secret research facility and once again dominate, different & new. All the people like us will be gone or non-influential and the younger crop will not have any baggage about why they like/dislike the IBM brand. Clean slate if you will.

Let say this takes 25 years to complete. So what? Anyone waiting around for this? Not likely, but with an iconic name like IBM, where else can it go?

BarneyFyfe
July 1, 2013 at 12:10 pm

gdgt… ah to be young again at IBM. I still work at IBM. 36 years but I am voluntarily leaving this year. I can’t take it anymore. Executives are micro managing to the nth degree. With that said…. IBM “brand” and what it means. Used to mean the best of whatever – hardware, sales, service, support, etc. In that 2015 roadmap is the new next generation IBM with a brand new naming convention. PURE SYSTEMS! What the hell is that? Sounds like a water filtration system for my house. Think Coke and what they went through. PURE SYSTEMS – what is it? this is the death knell of IBM.

A Different Scott
June 21, 2013 at 3:31 pm

Or maybe IBM will be the second iconic, century old, New York-based corporation to go out of business in the next decade. Kodak went first…

John
June 21, 2013 at 3:31 pm

Business IBM has lost — Hilton, ServiceMaster, Disney, NEHTA, State of Texas, Indiana, DoE, Sprint… Those were prominently mentioned in the press. The real list is much, much longer. I think it is about time for those customers to speak up. The only way IBM is going to be pressured to clean up their act is if their customers start telling their stories.

There is another way to look at this. IT is a critical tool in running a business. When systems are down it causes a business serious problems. The work force can do their jobs. Products can’t be shipped. … A couple years ago I called Hilton to get a room. The reservation system was down. They connected me to the hotel and they confirmed manually they could get me a room. When I arrived at the hotel they picked my room from a list of rooms on a clip board. Someone from the hotel accompanied me to my room to make sure someone else wasn’t already using the room. Two days later when I checked out, their systems were still down….

IBM’s terrible service is seriously hurting the business of its customers. IBM is saving lots of money, but it is costing their customers dearly. The indirect costs of IBM’s business practices are enormous. It truly is time for IBM’s customers to speak out!

Chris
June 21, 2013 at 4:06 pm

IBM was a good Company, and I used to buy hardware, software, and services from them. I stopped a few years ago. There are cheaper and simpler solutions out there, and I don’t have to jump through hoops to get a fix. IBM will find itself where Hostess is, bankrupt, and selling what is left for pennies on the dollar to the highest bidder. I actually enjoy hiring ex-IBM folks when I have an opening, most find the grass is greener. From listening to them over lunch I have found most believe Management could care less about them or their skills. IBM may one day wake up, but the question is, will IBM finally treat it’s customers and employees as an asset, or will they keep ignoring customers needs, and treating their employees like a number? When IBM finally looks at me and my business as something other than a number, I may let the Sales folks in for more than buying me lunch.

Mike Hunt
June 21, 2013 at 4:24 pm

The service IBM Management provides to its Customers sucks the sweat off a dead man’s balls.

Adrian Cronauer
June 21, 2013 at 4:40 pm

I’m not sure what that means, Sir, but it sure doesn’t sound positive ….

The business plan is “take everything you can get, and give nothing back.”

It may be a savvy way to deal with customers and the zenith of capitalism, but it sounds like the punch line from the Disney Pirate movie. And pirates didn’t have honesty and integrity as their guiding values.

Other lost business list should include Bank of America also…..oooops….

Sam Rommety
June 21, 2013 at 6:04 pm

Can’t wait until this pathetic ass company goes out of business

TomB
June 21, 2013 at 7:26 pm

Sigh, so IBM misses it’s 1st quarter revenue numbers. Ginny blames the sales force, the dwindling, less mature, largely ‘acquired’ sales force. Revenue has been flat for a LONG time, primarily because the sales force is in constant churn (large dollar sales take a long time, and usually require a decent relationship with the customer, which the constant sales churn prevents). Amazingly, despite the sales territory churn, and reduced ‘feet on the street’, the revenue has actually remained flat, not declined. My opinion (34 year IBM’er in software sales) is that the constant decline in, or churn of, the sales force has finally caught up with them and at this point revenue will likely not recover. This latest layoff has actually reduced the number of sales personnel, and there is no way that the remaining folks can provide the sales increases that IBM needs to turn this trend around. At this point, the ‘heritage IBM’ people (the older ones like me, with the historical IBM view of the job where pursuit of excellence was the main thrust of customer support) are mostly gone, and the remaining sales teams have gigantic quotas, and even if they make it are more likely to have management cap their earnings than reward them for it. Look at the trend, faster processors and servers, requiring fewer software licenses to accomplish the same work, gigantic quotas with little chance of getting adequately rewarded even if you DO make the number, and only an expectation that next years number will be 25% larger than the one you didn’t make this year, and you can see that the ‘best and brightest’ are no longer staying with IBM. The ones that I know that have left in the past couple of years invariably made more money with less stress. IBM is in much more serious trouble than the market understands.

Farouq
June 21, 2013 at 8:39 pm

IBM no longer needs innovate employees with original ideas to be successful. IBM just needs acquisitions it can milk for as long as possible until the next set of acquisition comes along. IBM employees need to stop worrying about changing IBM and instead change themselves for this new reality.

Chris
June 22, 2013 at 8:12 am

Farouq, you bring up an excellent point. It is the responsibility of each of us, when we can clearly see that things are only going to get worse in the current situation, to move on and find a better option.

trexibmer
June 21, 2013 at 8:52 pm

IBM management running the company should change the name to the Idiots Bastards Morons Corporation. I think the majority of it’s customers are feeling this way about IBM.

IBM is now throwing more cheap resources to help the customer. The customer just wants competent and knowledgeable IBMers to fix their problems and offer solutions. Not just lipspeak from a small army of IBM workabees who are not as knowledgeable as the employees they once had and the ones that IBM will soon resource action out.

Cringely is right. The IBM stock price will go down and down. Look it already has since the Fed is not going to give any IBM any stimulus. So ever onward IBM… to Roadkill 2015 and possible extinction.

gdgt
June 21, 2013 at 9:48 pm

can someone explain this 2015 plan? What’s special about 2015? How about a 2014 plan or a 2016 plan?

Robert X. Cringely
June 21, 2013 at 10:13 pm

IBM’s 2015 plan was hatched to deliver $20 earnings-per-share to the delight of Wall Street. IBMers were offered a carrot, a few shares of stock granted at the end of 2015, as a reward for helping them achieve that target — IF they are still with the company then.

gdgt
June 22, 2013 at 8:39 am

So in exchange for working your a$$ off for three years, enduring constant layoffs of team members and fear of your own demise, and assuming (as you’ve said) that you’re still employed, you get five shares of IBM stock (or $500 to $1000) worth of stock while the executives get millions in bonuses? If the plan didn’t pan out you still did all that work and didn’t get anything? IBM bonuses is a section in the IBM history books, not a reality today. Not a single department I know today has the “budget” to keep everyone employed, let alone give out even a token bonus.

We worked nights, weekends for almost a whole year during a massive migration to move thousands of server applications and data bases from one data center to another so the customer could save money on rent by moving to an IBM data center. Not cheaper, only cheaper when they factored in the fees associated with not leaving before the contract expired (and couldn’t be renewed.) What did we get in the end? More layoffs since those local resources were no longer needed after the move to the new data center.

Njia
June 27, 2013 at 4:40 pm

It’s actually worse than that … Not only do you have to be around between now and 2015 (unlikely) but you have to wait out the vesting period in the stock (not a chance in hell).

BarneyFyfe
July 1, 2013 at 12:23 pm

Robert, I still work for IBM and have for 36 years in hardware services. Since Ginny took over I have watched some of her videos to employees. Honestly, it appears to me as if she is begging for help. Almost childish – certainly not CEO – rambling with this “we are in this together” rant. Then she pushes these ridiculous “jams” and expects everyone to drop what they are doing and participate in live chat sessions to make things better. Oh year and be honest. Pathetic behavior from a CEO. She is pushing this jam online “live” chat crap in such a way as to hopefully appear to be a “google” type environment where we are having fun at work. Bwwhahahahahahahaha. Yeah right. No raises for 5+ years and you expect loyalty? She is so out of touch as are all the executives at IBM.

Zippy
June 22, 2013 at 2:47 am

With the IBM Management fixation on Roadkill Map 2015, one things stands out – What happens after that date (2015) ?? Does the world end, Ginny ascend into Heaven (or descend into a Hell of her own making) or is that the time of the Second Coming ??? I guess whatever few IBM employees are left will have to wait to find out. And am I glad Randy Macdonald of HR is gone ?? Absolutely, and I hope he gets what’s coming to him – bad Karma by the truckload ! He needs it in his retirement – no one is going to shed a bitter tear for that evil man. (I’m still waiting for the verdict from the UK High Court of the IBM UK Pension scam.) Same goes for Sam Palmisano who tries these days to reinvent himself as an education advocate – he did away with the EXITE camps where schoolgirls learned technology. IBM is nothing but a disaster zone with social marketing ! They need to cut more middle managers in Armonk as they did in this last round of cuts……too worthess and clueless MBA managers and executives reduce your profit, IBM ! Go, cut, cut cut …..

GMF
June 22, 2013 at 5:02 am

Bob –

Since disgruntled people will always be more vociferous than satisfied ones, I don’t think the number of comments to your post has anything to do with the validity of the post (though I think it’s valid).

One thing that will keep IBM going, at least in a slower decline than you predict, is that its customers and competitors are all in the same terrified position… do more with less. The companies and government agencies have exactly the same mandate as IBM – cut costs but not services. Sure, they may realize that the promises are more than likely to be unmet, but the Nobody Ever Got Fired For Choosing IBM mentality still exists. IBM dangles a great support deal, the customer chooses IBM, sweats it out for a year or two, then gets to say, “if IBM couldn’t do it, nobody could.” And the customer CTO keeps his job and budget for that time.

Competitors have the same tactics to keep costs down: drive out the expensive workers (nobody gets a 1 rating, forced unsatisfactory ratings for x% of a group), only hire people with less than 5 years’ experience, demand immigration reform. If the numbers look good they hope for the “bigger fool” theory to kick in where a competitor with money (who’s left?) will buy you out. HP might have money but they’re still trying to divest EDS – nobody wants to buy a services company – and Oracle definitely has the money but they can wait and pick over the carcasses for pennies on the dollar.

So the agony will continue. Despite customers abandoning IBM (and others) there’s nowhere else to go so the merry-go-round whirls. There haven’t been major infrastructure calamities – the customers with smarts have gotten out before a catastrophe – so there isn’t any sort of watershed or domino to trigger a major change. As several commenters have noted, it’s a race to commoditize the support business before that moment occurs so that if not Skynet we have the utility grid with mobile devices (and people) each handling snippets of support that add up to adequate coverage.

We’re in the wrong business at this moment in time. Like the fine journalists who wrote for top quality magazines and now the magazines are gone, it’s disappointing to see quantity replace (or overwhelm) quality. It’s exhausting to try and keep up with the engineering flavor of the month when the trend changes and a kid out of trade school has 3 more months of experience with NewTool than you do, so you’re out. I’m not wishing for an infrastructure catastrophe, nor do I think one will happen, so how can we effect change under these circumstances?

longtimereader
June 22, 2013 at 5:40 am

Good article and assessment. They predict that 1500 jobs will go in IBM Australia:

I have worked at four other software companies, two of which are effectively out of business. Both of which followed the same model IBM has been employing for the past several years:
1) Not recognizing that the least expensive sale that can be made is the second (and third…) license of a product to a very happy customer,
2) Not realizing where the real revenue is coming from – maintenance and upgrades, and not investing in current highly profitable product line to keep that revenue stream healthy.
3) Thinking that the front line technical staff are interchangeable parts.
4) The belief that ‘we can acquire our way out of stagnation.’

This model is often seen in companies where the executives have been to long away from actually being responsible for complete delivery of a product. Where failure is glossed over at the top levels, and brutally punished in the ranks.

IBM can return to a position of preeminence in the technical world. It will require sacrifice on the past of the leadership, not the workforce. It will require a new vision rather than a continuation of failed and failing policy. Quite possibly the best thing that could happen right now is if 1/2 of the executives were fired on July 1. It would be months before anyone noticed they were gone.

Aruba Johnson
June 23, 2013 at 9:18 am

GottaLoveIt said: ” Quite possibly the best thing that could happen right now is if 1/2 of the executives were fired on July 1. It would be months before anyone noticed they were gone.”

LOL! Here is a current example of IBM Bloated Management “Smarter Planet Club”.

Take the VP of something called Global Smarter and Innovation Alliance Solutions.
This VP has only 4 people reporting to him.
An isolate case you say. But his boss has the title General Manager, and this GM has only 7 other people reporting to him (mostly people with the title Director, but who don’t have anyone reporting to them so what is it that they are directing?). The entire chain of report for this GM is 12 people. That looks more like a 1st line managers role than a General Managers role to me.

But wait, there’s more. That GM reports to another GM, who reports to a Senior VP, who reports to the CEO.

So you have Director->VP->GM->GM->Sr.VP->CEO Lots of Managers but no one producing anything.
If all of those managers were fired July 1 as GottaLoveIt suggests, who would notice, indeed.
That’s your Smarter Planet at work.

Watson_To_The _Rescue
June 23, 2013 at 4:23 pm

It would indeed be a Smarter Planet@Work if Watson was to take over the IBM Company and give the CEO and her Executive Staff the boot (which they rightfully deserve) and the IBM Board (for sleeping on the job) the same treatment. That would be True Intelligence@work, not the made up PR BullS**T from the IBM Social Business Marketing Wonks ! Pity the guy who developed Watson technology also left the company (I kid you not) to work elsewhere – I guess he saw the writing on the wall or Watson told him what could be coming his way in July 2013 ! Sad, sad, sad ……no excuses for a pile of horse manure to be running a public company.

ExBeemer
June 22, 2013 at 6:24 am

I wish you were wrong too, I but I don’t think you are. Let me be clear to all that read this, I do NOT want to see IBM fail. I very much would like to see IBM return to it’s former glory, but I know that can never happen given the current direction the company is headed. I have a 61 year affiliation with the company. I’m a second generation IBM’er whose father started working for them when I was two years old. (I’m 63, retired from IBM after 32 years of service.) IBM provided my family an excellent quality of life while I was growing up in Poughkeepsie NY. During my adulthood it gave my wife and kids and I a great quality life too. It’s HARD for me to not be grateful to IBM for that. That said, it’s equally difficult for me to see what has become of what was once the finest corporation in the world.

Does Ginni Rometti not know that she can only save her way to a profit for just so long? Doesn’t she understand that she can only grow IBM’s business by selling more of it’s good and services? I think not. And I regret that very much. I’m certainly not alone. I’ve had conversations with many former longtime IBM’ers. They all say the same things about today’s IBM. Funny thing is, they all were once just like me; a proud IBM’er that couldn’t wait to get to work each day so that they could return the many favors IBM did for them. You can not find that attitude in today’s IBM anywhere, not matter which IBM site you visit.

BarneyFyfe
July 1, 2013 at 12:29 pm

exbeemer… I still work there as indicated in other posts. I am unhappy now but I thoroughly love my job as a Customer Engineer and couldn’t wait to go to work the next day. This lasted for many many years. My unhappiness started in around 2005 when, as a manager, I saw the bean counters and HR taking over our day to day operations. Micro management started to come into play. Today, it is not fun. I am leaving, unhappily, after 37 years with IBM. I will do something else and it will have nothing to do with computers.

UX Designer
June 22, 2013 at 7:08 am

Has anyone realized the IBM is also HIRING new skills they need? The layoffs are a restructuring and there is an effort ot hire more UX Designers etc so there are more people in the company with client experience skills. Learn about it here : http://www.ibm.com/design/

BeenThereDoneThat
June 22, 2013 at 9:21 am

The fact that IBM’s own web site describes a rosy future for IBM is hardly news to anyone here. However the view from inside is remarkably different. IBM’s internal job listings show almost 24,000 supposedly “open” positions. But if you actually put yourself in play for any of them, the response is a deafening silence — at least if you are a US-based employee. Anyone smart enough to be employed by IBM in the first place is (in general) smart enough to learn a new skill. But IBM has no interest in retraining current employees. The HR office has a revolving door with well-paid, experienced workers who have been loyal to IBM for years leaving with pink slips while a line of dirt-cheap offshore labor comes in the other side. Meanwhile the top execs shed crocodile tears as they cry to the media and Congress, “there just aren’t enough skilled workers in our own country!”

Big_Bleu_Cheese_sucks!
June 23, 2013 at 6:14 am

I’m afraid IBM is giving the impression of hiring for the new century, but the sad truth is who needs those UX designers or a UX design group when you’re simply in the business of buying up companies, switching their customers over and putting your own brand on the products for the next two or three years before you kill said product for lack of support or development ?? That UX design can be done (outsourced) to India, China, Philipines, Malaysia and even good ol’ Africa – it doesn’t need to be done in the USA when you have talent (new IBM buzzword) and connections (* older IBM buzzword) everywhere !

And while Sammy “the man” Palmisano had his old boys club of Steve Mills, Mike Daniels, Randall McDonald and others in his swelling cost cutting executive ranks, Ginny has not been outdone by starting her own “girls” club with the likes of Horan, Gherson and the new kids on the block…….Wonder how this organization all looks in mid July 2013 and compares with 2015 ????

twaj
February 8, 2014 at 9:56 am

Have you applied to it? I have internally and directly talked to the design head and looking at her attitude I must say one of the worst to be ever seen in my professional career. Not much interested to share what exactly it is. Not encouraging to internal employees to participate and show their skills. She is working as if this design lab has been forced on her. When I asked her if I can send her my cv. She told send me your portfolio. As a normal software engineer I only know what is cv and not what is portfolio. On asking her about the details and how could I create one she had very deep demoralizing statement to tell me. I felt her attitude towards internal communication quite demoralizing and not interested. And I have personally seen various technologies used by design labs its nothing new or innovative developed by the company its just combination of tools of other companies and one or two tools used by company to create rich web interface. One such company is adobe, whose tool is being used by design lab.

Chris
June 22, 2013 at 8:05 am

Why is any of this news to anyone? The lack of caring of IBM executives for anything but their large salaries and bonuses has been evident for at least the last 6 years. My question is, why don’t shareholders care? At the end of this, the company will be decimated and their shares worthless. Do they really all think they are savvy enough to sell at the right time before things crash? As with most issues in this country, the problem comes down to pure, unadulterated greed.

Robert X. Cringely
June 22, 2013 at 10:40 am

Shareholders don’t often bother with the deeper story. They’ve been taught by the business press to concentrate on earnings-per-share so they do. And as several savvy commenters have explained here, IBM management has an almost foolproof way to achieve $20 in earnings-per-share by 2015 through share buybacks, layoffs, and selling divisions. But as other commenters have mentioned there seems to be no plan at all for post-2015. And maybe management doesn’t care. Shareholders and executives alike will ride earnings until those turn and then they’ll leave, simple as that.

SadEmp
July 12, 2013 at 3:17 pm

You have hit the nail on the head. Your story is what I thought I was getting into when I joined the company, only to find that I was living the nightmare and not the dream. It is the saddest period of my life.

Ex-IBMer
June 22, 2013 at 11:26 am

Mr. Cringely is spot on as usual. Why do I say this? Because I spent over 25 years working for big blue and watched the place erode beneath my feet like a limestone rock under rushing salt water. The place is eat up with executives who are nothing more than corporate politicians looking out for their own careers and wallets. It’s become a financial engineering holding company in major decline. Working at IBM as a rank-n-file technical person had become a case study in career suicide. If you have technical skills, get out asap! I did last year and was most pleased, and consider myself very fortunate, to have found employment where they actually value their employees as ‘people’ and not ‘resources to be discarded in order to prop up quarterly EPS.’ IBM has Wall St. totally bamboozled but that, too, will end soon. Sadly, when the end approaches, IBM executives will take their spoils and run, leaving the employees, clients and remaining shareholders in the mud. Classic case of ‘The Emperor Has No Clothes’ and someday to be published as a business class entitled ‘Do Not Attempt This.’

Outside-Looking-In
June 22, 2013 at 11:34 am

The IBM top dogs (no pun intended) can spin these latest layoffs however they want: ‘remix’, ‘re-balance’, just pick your slogan. But the truth is that IBM is in fast decline all because of executive (and Wall St.) greed. The leadership has gutted the company, destroyed morale, offshored to the cheapest labor possible (irregardless of skill) and sent a once-great company swirling around the toilet all in the name of ‘maximizing shareholder value.’ I’m now (very happily) with another company and we continue to be amazed, in a bad way, how horrendous IBM service has become. You never know who you’ll get on the line when you call 1-800-IBM-SERV support. But one this is for sure, you definitely won’t get anyone from Armonk as they wouldn’t know what to say in the first place.

Ray D
June 22, 2013 at 4:49 pm

You didn’t say it first. I said it a long time ago. This all started with Gerstner, then Palmisano and now Rometti. They are not tech savy. They don’t know how to do anything new, all they can do is cut costs. Cutting costs only works once. IBM has been bent to get rid of the hardware as they learned by following Microsoft that software was more profitable. First they went to services which are labor intensive. Yes IBM does middleware but how many companies need middleware. Notice how small the software revenue is for IBM, it may have high margins but its not a majority of the incoming revenue. So IBM jumped on the services bandwagon and started to do better as Gerstner straightened out some things. Then when Oxley Sarbane went into force, Gerstner didn’t want to sign the financial statement and retired. The little RJR Tobacco CEO in his prior life ran away with his tail between his legs. By the way, he was the 2nd choice to lead IBM, its just after the first candidate turned it down that the IBM board said he was the first.

Palmisano, this is the CEO who stuffed the PC channel for 8 quarters at one point. Oh yeah he is real good. So he cut some more and of course he doesn’t bring anything new in. Then just before he sets up Rometti by appointing her CEO, he makes this stupid promise to have $20 earnings per share by 2015. The author is correct in his opinion that IBM has its blinders on and doesn’t care about anything else.

What has thrown the effort into crisis is that Lenovo walked out on the purchase of the x86, System x server business. The CFO had already booked the profit in the deal in his plans. And now that its not going as expected, IBM executives are scrambling for a recovery plan. Yes there are rumors that Lenovo is looking for funding to support the purchase, the fact is it isn’t going to close when IBM wanted it to. I dont’ know why Lenovo would want it, I heard it was only the commodity x86 servers and not the server blades. All Lenovo needs to do is wait til IBM gives up on it and pick up the manufacturing capacity that IBM is no longer using.

The fact is that IBM has no vision to bring in new revenue, there is more competition in service and even what they have is labor cost intensive, no profit margins. Its just too late, most of the experience employees are retired or laid off, lost benefits. Why would anyone go back to that to help some company that lied to them and broke promises. There will be other companies that will pick up the slack.

Fed up
June 22, 2013 at 6:28 pm

Everyone should write to IBM Board of Directors:http://www.ibm.com/investor/governance/board-of-directors.wss
Copying media and legislators. For BoD members who are CEO’s, write their board members also. Keep a level head, point out what is going on and effect. Question their ability to lead effectively.

why would Lenovo buy IBM black-box x86 server line? they have more power in some of their present offierings. all Lenovo has to do is re-engineer for double or triple MTBF in components and layout, optimize I/O throughput, buy a couple shiploads of fast hybrid disk, and poof! — another death in the IBM product line. Lenovo has its own brand cachet now, they don’t need IBM’s to get past purchasing once. if they do the inside right, and they’ve done just fine since buying desktop and laptop PC IBM, they’ve got the inside track with purchasing from now on.

BarneyFyfe
July 1, 2013 at 12:35 pm

Gerstner was brought in to cut the fat and he did. Management as well as lots of dead wood were cut and rightfully so. Without Gerstner it was likely that IBM would have been in the pickle they are in now only 20 years ago. BUT…. Palmisano comes in and rebuilt the bureaucratic empire all over again filling positions with cronies and yes men. Gerstner had management chains down to about 5 maybe 6 levels. We are now back up to 11 or more levels of management. No surprise IBM is where it is today.

This would be the US centric “GM and VP” club who are foul-mouthed , overpaid , and spend their time abusing subordinates , working out ways to avoid tax (they should have been at the inquiry with Apple) …and siphoning money from the world back to Armonk. The good people are leaving (most have gone), in their droves (many by choice). There is no strategy. IBM missed the boat on “cloud” and still doesn’t get it. They are trying (again) to force customers into a “one size fits all” approach. It doesn’t work. They have failed twice before. The Services company is in dire trouble, I believe it is terminal.

Sam P started this rot (and undid so much of the great platform Lou built) , and one of his deputies ( and co-architects of the ridiculous 2015 commitment) is now keeping the oil tanker headed directly at the rocks.

As an employee it is somewhat disconcerting to see this happening , but in all honesty as a top rated performer in the company for 10+ years, with no pay rise worth mentioning in that time, or thanks for 80+ hours weeks ( while watching the fat cats in the US blunder along and get paid fortunes…..) I don’t give a shit …….now I work much less , and the weekends are mine…….so I’m sure I won’t be around long.

I pray for another Lou …….. there is no senior exec talent in IBM , smart enough to save it

Big_Blue_Second_coming
June 23, 2013 at 11:40 am

Sam Palimsano destroyed IBM by cutting employees when he really should have cut his bloated middle management ranks who cost most and do nothing but report up the IBM food chain….but he never got it, he was only there to fill his pockets with as much as he could loot. Because looting is what he and other execs and bloated middle managers did for the last decade. No other words can describe the atrocities towards employees…except payback time has arrived for Sam and his kind ! Karma is a bit*h !

Hope they also go for the children of the former execs and IBM board members who are treated like royalty and who are given preference for positions and promotions over better qualified candidates, even when said children are the cause of several failures due to a lack of experience. IBM management just hushes things up and moves the “problem” children to other divisions to give them get another chance……would such chances be given to other regular employees or their children ?? I don’t think so…….preferential treatment and nepotism are the order of the day in Palmisano’s and Rometty’s IBM.

Anonymous
June 23, 2013 at 11:16 pm

IBM executives are abusive, arrogant, nasty, foul-mouthed bullies. I’ve been on several calls where they use the F-word repeatedly and berate and humiliate others. None of this happened 10+ years ago. IBM has become a nasty company run by nasty people, and it’s only getting worse.

JPB
June 22, 2013 at 5:57 pm

For what it’s worth, I see very few actual customer stories here.

Kevin Kunreuther
June 22, 2013 at 11:45 pm

Here’s an option not voiced by Bob.
IBM’s customers will be aggressively pursued and wooed successfully, sometimes by just saying, we’re not IBM, driving revenue down further, causing stock prices to plummet enough to make it an attractive takeover bid; someone will come along and buy up the once mighty Big Blue, in much the same way SBC Communications bought out AT&T and rebranded itself as the new AT&T, and the new owners will rebrand itself as the new IBM and re-launch the brand into some other business.

Ben Lee
June 23, 2013 at 9:10 am

The last set of RA’s (resource action) were started because IBM made $3.00 per share, instead of the predicted $3.05 per share. A whole 5 freakin’ cent miss people! And Ginny and her cronies decide to have the largest set of firings in several years. How can any company have stellar performance when we are slogging through the worst reccession since the 1930’s? 0bama, and the democrats’ policies are doing their best to destroy all companies in the US with HIGH corporate taxes, 0bamacare, wealth redistribution (and soon cap and tax if they get their way), monkeying with executive compensation – they could clear up a lot of this crap by outlawing stock options AND allowing corps to deduct ALL cash compensation. They should make make stock options illegal.

IBM is only a few employee cuts from destroying itself. I’ve lived through the last set of RA’s. ie firings; the fired came in 2 classes. The 55 year old who is too expensive for IBM when India and Chinese engineers are 1/2 the cost….Too bad most of the Indian/Chinese IBM hires on the cheap, can only do 1/3 of the work. The 2nd class are the lower performing 20 somethings the bean counters included to make the firings look like it wasn’t age discrimination.

Yeah, all they continue and know how to do is fire the few producers for the company that are left. That apparently is their ONLY business plan.

IBM thinks it can move design and development to India and China, and have a few US project managers “run” the show.

Anonymous
June 23, 2013 at 10:20 am

IBM thinks that by hiring more at cheaper rates the work will be done faster. The bean counters in Armonk do not understand, 9 women pregnant for one month will not get you a baby.

Jonathan
June 26, 2013 at 12:50 pm

Fascinating, isn’t it, that very observation was born at IBM some four or five decades ago. How quickly Western culture repudiates its antiquity…

LastIBMerStanding
June 23, 2013 at 11:35 am

Over the past 10 years, IBM has stopped listening to its employees or middle-management, even up to the Sr. VP-level. As for U.S. executives, they continue to play musical chairs. The only new additions to replace the rapidly retiring are recent immigrants from IBM offshore organizations. They are so happy with finally getting recognition and advancement that they are ignorantly loyal, passive, and unthinkingly conformist. The customers these days have IT organizations that are chaotic messes, on the verge of collapse, due to mismanagement–lack mature services management, process and systems. They believe IBM can save their IT and cut costs, including whacking resources. The reality is that IT realignment and transformation comes at a premium and the contracts are basically “your mess for less.” The customer decision makers won’t expose they made huge mistake and after transition to IBM cannot afford to change. It’s the really big customers who can walk away. So, IBM CRM is symbiotic and parasitic at the same time.

I AM A RETIRED IBMER OF37yrs, I WAS IN MGT IN POK. MGT. FOR 16 YRS , AND IN WHITE PLANS
FOR 8 YRS
I HAVE BEEN RETIRED FOR 25 YRS. IN ALL THAT TIME I HAVE NEVER MISSED A
RETIREMENT CHECK , OR BEEN SHORTED ON ANY MEDICAL PAYMENTS DUE ME. AS FAR AS
I AM CONCERNED, I AM APPALLED AT THIS ARTICLES, BUT PLEASE UNDERSTAND THAT I AM
ONLY TELLING YOU OF MY EXPERIENCES WITH THIS COMPANY. FURTHER WHEN I FIRST
JOINED THE COMPANY WE WERE MAKING THE 024-026-and the 056 KEY PUNCHS PLUS THE
BANK PROOF MACHINES.

Steve
June 23, 2013 at 1:55 pm

@hd Flanagan – the older generation who knew IBM of the 90’s and earlier.. Of course your view of IBM is a happier one and rightfully so.. No disrespect, but your comments here are no longer valid or relevant. IBM is a different company now. A company where employees are a necessary evil, rather than a valued asset.

ronc
June 23, 2013 at 3:47 pm

I’m receiving a pension from a non-existing company, the old AT&T. So I’m not sure that pension checks prove anything. My pension actually comes from the insurance company that inherited the job since that is their business. Based on the comments in this article, I would guess that IBM would find a way to cut your pension if they could do it without loosing shareholder value. (By the way, all caps is considered shouting.)

james
June 25, 2013 at 12:26 pm

Cut HD some slack on the all caps. He retired 25 years ago – 1998 – before the World Wide Web existed.

Yea, I remember the good old days. In general, I love the fact that I can do a Google search without worrying about capitalization.

BlueFluLou
June 24, 2013 at 5:49 am

By your math HD you retired in 1988. God bless you, those were the good old days. There is a clear line in the IBM sand of 1993. Everything changed then. 1/3 of the workforce was fired, Akers was replaced and while things recovered for a while the long term trend, especially for the employees, has been downward. You’re my father’s generation but this isn’t my father’s IBM. When you retired the decision was yours, you weren’t forced to do so because you were fired in a massive Resource Action. You got a traditional pension (those are gone), you got health care in retirement (that’s gone too), you even got free golf at the country club (the free golf is gone and so are the country clubs). It’s not even those actions that current employees are disgusted with. It’s the lack of any respect for the individual and an ever present feeling that the strategy of the business is misguided and doomed to fail.

I’m sure you saw many business ups and downs during your career. IBM’s approach to a recession was always to hunker down. Work got called in from sub-contractors to keep the core employed. Since 1993 the reaction to any bump in the road is to fire the core employees. Even when business conditions are improving the business is on a relentless outsourcing mission trying to improve profits without organic growth.

I’m very happy that you are able to enjoy the retirement you deserved and wish you many more years of health and happiness.

BarneyFyfe
July 1, 2013 at 12:42 pm

Flanagan… hehe… I worked as Customer Engineer and when hired worked on 029 and 129 keypunch and get this…. 1260 and 1201 bank proof machines with on the job training! Those were the days and I really love my job. Those days are gone. Bitter place to work today.

Vicki
June 23, 2013 at 2:19 pm

I remember at the University in Business law I studied briefs on IBM and how they rewarded risk. Well I was a relative (4 years) newbie with the company when Gertsner took over. A lot of the old time IBMers who retired and have medical just can;t swallow this but it’s all true. I saw a good company go south. In the mid 90s I watched managers lay off employees to save themselves (i.e. they took their job). I was under the old pension plan and got caught up in the layoffs in 2007 (i.e. target on my back). I warned a friend it was going to happen to him too and he called me a nut case. A few months down the road sure enough he was gone too. They have been getting rid of the defined pension people for years and they don’t do it in one big swoop so as to not attract scrutiny. Now I didn’t have to train my replacement because I’m sure that she/he just took on extra work load. I went from a team of 3 to me. It was horrid working 6am-10pm everyday and most weekends (because I was worldwide). If I didn’t make my numbers I got dinged – it the execs were failing they just moved to another division without any accountibility. It’s too bad. It used to be a great company. I went to school part time to get my degree so I could go to work for IBM. I’m sure Watson is rolling over in his grave…

Njia
June 27, 2013 at 4:58 pm

Watson rolling in his grave? Not hardly. Thomas J Watson was as ruthless as they come and don’t let anyone tell you any differently. Among other things, he was indicted by the Taft Administration and convicted of creating and maintaining a monopoly while the head of NCR. He also sabotaged the machines of his competitors (Maney, Kevin (2003). The Maverick and His Machine: Thomas Watson, Sr. and the Making of IBM. John Wiley and Sons.)

The exact projekty domów jednorodzinnych puncture opposition for PERMINATOR is usually 47 p . c a lot better than essential by ASTM E1745 and can sequentially protect the low perm status by dealing with punctures around the construction site.

ronc
June 23, 2013 at 3:53 pm

Watch out. That’s a Polish domain (.pl).

R1p
June 24, 2013 at 11:09 am

There are two groups of people a company must keep happy to remain at the top. The first is the customer and the second is the employee. I left IBM last year after watching ten years of change from a customer and employee driven company that was innovative and exciting to a numbers driven beast. ASk most employees to be candid, and they will reflect on the old IBM and the way things used to be. This week’s recent management changes within parts of Global Services reflects on IBM’s lack of understanding of what makes a good manager as people walked through the door to find out they have been thrust into middle management. Some of the best resources and leaders at IBM have no want to be a manager, and most managers these days are just there to deliver crappy news to the employees. IBM has lost the concept that companies can lead through innovation and quality, not just low cost. People have always payed more for innovation, and the bean counters are sucking out of Big Blue. I hope for a day that IBM returns to customer and employee loyalty as they turn back to an innovative company.

TimK
June 24, 2013 at 11:28 am

Isn’t this happening all over America? Isn’t this the result of MBA-CEO-USCOC (US Chamber of Commerce)?

As an extension, isn’t this what supply-side republican policies doing to the country? And isn’t the world suffering as a result?

The CEO class has the ultimate union: the brotherhood of the CEO or the Solidarity of the US Chamber of Commerce. These guys have been getting rich for 50 years while cannibalizing companies. The average CEO tenure is less than 4 years. CEO’s goal is to maximize his estate before he moves on to living off of it. They don’t care what happens whatsoever to the company, let alone its employees.

I believe, ultimately that the solution will come with a version of widespread tenure at publicly owned companies. You see this all over Asia. When employees have tenure, the corporations tends to operate with their interest in mind. What’s their interest? Employment security. How do you achieve that? Focus on long term market share growth. Guess who else values market share growth? The stock market. Thus tenured employees tend to be better proxies for shareholders than American style board of directors with lots of CEOs from other companies on them – who all seem to want to raise each other’s salaries.

This movemement towards widespread employee tenure will emerge but you can be damned sure that the U.S Chamber of Commerce will pull out all stops to keep it from happening.

It will be a long a bloody battle, but as Al’s columne points out, there’s already a lot of blood in the water – little people’s blood.

ronc
June 24, 2013 at 5:27 pm

“When employees have tenure, the corporations tends to operate with their interest in mind.” That can also be problematic. Isn’t that the problem with our educational institutions? Bad, unmotivated, teachers can’t be fired. Employees must be taken care of and motivated. Tenure fails on the motivation side.

Jonathan
June 26, 2013 at 12:45 pm

Maybe teachers aren’t motivated because society doesn’t ACTUALLY want them. If we *did* want them, we wouldn’t freak out about paying them like any other professional, we wouldn’t be second-guessing every bit of agency they could exercise, we wouldn’t privilege the armchair whinging and cultural exceptionalism of parents over the mission of the instructor, we wouldn’t be letting privatization advocates lie with impunity about their incentives and goals, and we wouldn’t humor authoritarian cultures by not immediately ejecting them from the room by force when they try to block teaching of critical thinking because they “challenge parental authority”.

No, we want horse-whipped supervisors at Applebee’s at the head of our classrooms and IBM senior management as superintendents.

You reap what you sow, not what you stomp your feet and demand.

Ronc
June 26, 2013 at 5:01 pm

“…we wouldn’t freak out about paying them like any other professional…” True. I suspect we’d be better off with higher salaries instead of tenure.

TimK
June 28, 2013 at 1:16 am

Tenure for teachers is widespread in East Asia. This doesn’t explain why they are brilliant at math, and lousy in other areas.

Moreover, our higher education system is based on Tenure. Then again professors in Europe also have tenure.

When one receives tenure it changes ones focus. A non–tenured professor will refer to “the” university, a tenured professor will refer to “our” university. So it is an even exchange: the University runs with the employee’s interest in mind and the employee runs with the university’s interest in mind.

This also occurs in East Asian corporations. Loyalty is a bedrock for long term competitiveness. And of course, tenure eases the introduction of new technology because the employee is not threatened by it, in fact it enhances his security.

Tenured corporations are highly competitive. Thus, they have their own built in motivations.

The idea that a person is only motivated by the threat of unemployment is short sighted. It was 2/3rds of the American automobile industry that went bankrupt in 2008/9, not the Japanese corporations with their tenured employees. Toyota is still very competitive.

What Japan does do differently is that they have company unions, which are ineffectual here, but work there because they also have tenure. But a strike there, when they did occur was just a sit down strike for one hour to send a signal to management of disapproval of a policy. Employees don’t want to kill the goose that lays the golden egg.

So perhaps individual schools could have tenured employees with individual unions. The employees will identify with their school’s reputation, which their future is vested in, and work to improve it.However, the East Asians have just one, nationwide school district, which also has unions and tenure.

Ronc
June 28, 2013 at 4:44 pm

“…Employees don’t want to kill the goose that lays the golden egg…” That’s the key phrase. As long as there is a “golden egg” no one wants to leave. It’s not tenure or unions…it’s total compensation (the golden egg) compared to other alternatives. Adding tenure and unions to IBM would make IBM keep the employees that have no other job prospects, while those who do would leave due to the poor short-sighted management that results in less total revenue.

mhikl
June 24, 2013 at 11:38 am

Bob, you’ve been saying this same *x*x! over and over again, for ever. I’m believing you, not saying I’m not, but when is this dying horse going over?

The pretty blonde does look worried. That smile doesn’t match the eyes. The eyes are looking over the bedroom her ageing granddaughter is moving out of soon, and getting a gander of her own next living quarters, house sharing with her son- and daughter-in-law if they are so inclined.

The smartest thing for IBMers to do is head for the hills. Your last articles talked about retirement funds being abused by IBM and the hills and that hippy commune idea from youth sounds their best plan yet.

Blake
June 24, 2013 at 4:48 pm

Dude, what are you on. I think you’ve been on w3 too long. unplug from the nine-dot and have a beer. Really.

ronc
June 24, 2013 at 5:36 pm

Sounds like good advice. What’s a “nine-dot”?

The Ghost of TJW Sr
June 24, 2013 at 10:06 pm

The 9 dot is IBM’s internal employee network……

Palmrometty
June 24, 2013 at 5:35 pm

Actually, Ginny is as shifty eyed and dishonest looking as ever (when she was running the Services and Sales businesses) like she is looking for a door that isn’t there….maybe she should call up Sam the “Reincarnated Education Czar Man” and discuss her exit strategy – after all, she’s lost the soul of what used to be a good corporation with 40 hours of Shades Of Grey, but the corpses aren’t bled dry yet, so get to work and suck harder, you level 10 and higher, “thought leading” bloodsuckers ! Forget the beer, blood is the elixir of life, especially when it belongs to others who are totally and utterly expendable………..

Like night follows day, darkness is descending on nearly 3,000 IBM employees who are being dishonorably discharged–the company prefers the term “workforce rebalanced”–from the payroll of the IT giant in the United States and Canada. On a global basis, the number is expected to exceed 5,000 and possibly as many as 8,000 could be without jobs by the end of the year. Earnings per share, which guides IBM’s decision making, should benefit, while families and communities get the dirty end of the stick.
…..

Bankr
June 25, 2013 at 5:01 am

Divisions making their numbers. Our CIO has been put off by IBM tactics of late. Sales folks attempt to bundle SW we do not need onto HW. We were approached by Research, to joint study projects on malware and botnet detection. Same organization that dumped IBM’s AV group to Symantec years ago, now claimed to have knowledge and expertise. They wanted us to pay for them to figure out what to do. We laughed at them. Now same group comes to us under the guise of big data analysis to analyze our network for threats. They wanted $1.5M/yr, to figure out how to do it. Our CIO found out that they were double dipping so to speak by trying to get a competitor to sign up for the same work. This meant that two companies were paying for the SAME people to do the SAME work with final deliverable a product that IBM could sell. When pressed hard it was found that Research or this particular department requires all projects to be funded by ‘joint studies’ so real money comes in versus IBM spending its blue dollars on development.

Unrelated, can anyone explain why David Ferucci the father of WATSON, who was made an IBM Fellow after the Jeopardy win was fired?

Garrett
June 25, 2013 at 5:23 am

Had to turn to ‘Infoworld’ to get some analysis on the Microsoft reorg….I guess Bob is on Hitus after the 2 week technical dilemma

nducote
June 25, 2013 at 6:25 am

9. Is the first octet of the main internal IBM intranet.

For those commenting about lack of customer input here, I imagine there is more employee interest here. I work with IBM customers every day and this article is spot on. I sold all my IBM stock about 6 months ago.

Kartoch
June 25, 2013 at 7:46 am

“No jobs are being lost at IBM France, as far as I’ve heard, because there would be no associated financial savings in that socialist system.”

But it seems this is just relocalisation in France, from the article: “The facility is expected to help create around 700 jobs and comes after the company said in May that it would cut 689 jobs.”

Anonymous
June 25, 2013 at 8:42 am

Lets tell you a tale of IBM ‘job creation’. A year or so ago, IBM asked for (and received) a tax break from a town in Westchester NY to “create 400 jobs”. Sounds great doesn’t it? Facts were. They closed down a satellite site in one location, and moved the folks from there to the main site.
NOT ONE SINGLE JOB WAS CREATED.

http://en.wikipedia.org/wiki/Thomas_J._Watson_Research_Center
“The Hawthorne building was a leased facility located on Skyline Drive, which is part of an industrial park shared by several area businesses. In 2012 the Hawthorne lease was closed by IBM and remaining employees were relocated to the Yorktown Heights site.”

InPlay
June 25, 2013 at 9:54 am

Yes, IBM is creating new jobs for every one laid off. The trouble is that the new jobs are mostly offshore. There are currently almost 24,000 “open seats” in IBM’s internal job listings — enough for every laid-off employee worldwide to have THREE new jobs. But don’t bother applying unless you are a “global resource”. I put myself in play for more than 30 of these before the RA hit, and the silence was deafening. Where I could see who was eventually selected for the position, the names were overwhelmingly Indian.

Hoang
June 25, 2013 at 8:11 am

Dear IBM customers,

Why do you need to use IBM services in this day and age? It tells me that you are incompetent! Time to quit your business.

chiph
June 25, 2013 at 4:58 pm

I’m reading all this, and thinking “How do I take some of their unhappy customers away from them?” I figure that their customers are accustomed to being over-charged and under-delivered, so if I deliver anywhere close to on-time with a product that meets their most-critical needs, they’re gonna love me.

bruce rosner
June 25, 2013 at 10:55 am

The theory behind layoffs is that you can reduce employee costs faster than customers leave. This is true because customers often have high costs associated with changing vendors. Of course customers will leave eventually and the death spiral continues. By that time the CEO and upper management have left with typically enormous payouts. In effect management is pulling out as much money as possible into their personal wealth before it dissipates. This is nothing new, corporations don’t live forever. IBM has had a good run far longer than most.

cmh
June 25, 2013 at 11:20 am

The quality of IBM software and support has gone down hill drastically over the last decade. I now cringe at the thought of having to use any software produced or supported by IBM.

T.R.
June 25, 2013 at 11:43 am

I work in a mainframe group and I have to say our IBM support is pretty impressive. If we have a problem we have a dedicated IBM rep to find people to help; she’s joined a problem call early on a Sunday morning before many of our on-call people did. On the other hand, IBM underbid Oracle and HP for Unix OS escalation support, and the Unix support people in our company have little good to say about them. Another large company where IBM does all of the IT operations support says that they have hardly any technical competence but great skill in explaining how closing tickets without doing anything still meets their SLAs. Ironically, their mainframe group probably has institutional knowledge that could give them a niche selling very good service for a very fat profit, but I’ll bet those are the people whose salaries put them at greatest risk of layoffs.
IBM has a monopoly in mainframe sales and services and that is dying but dying slowly. That’s the still-present past. The present is services, but everyone and his brother wants to be doing that. IBM’s advantage there may be that they’re not Dell, HP, or Oracle. I don’t see signs that they have a workable cloud computing service and that’s where the future is.

Grep
June 25, 2013 at 2:16 pm

This highly developed “closing tickets without doing anything still meets their SLAs.” process was perfected inside the IBM IT Help Desk. Many IBMers don’t even bother to call the help desk because all they want to do is close the ticket to meet their measurements.

With regard to ” I don’t see signs that they have a workable cloud computing service and that’s where the future is.” I’ll bet that IBM counts all of their SO and AMS customers as successful cloud implementations. Of course, all of the internal systems are most likely counted by the CIO as cloud implmentation. With counting like this one can conclude that IBM is a leader in cloud services.

TSRM_Sucks
June 25, 2013 at 5:55 pm

Those sleight of hand SLA dynamics must be the brainchild of the same IBM idiot who designed the TSRM product……….one heck of a slow and useless product, that even the internal IBMers consider it hopeless and outdated……….no wonder the Tivoli group recently renamed itself with the IBM buzzword – “Cloud” in their title ! But they’re clearly not leading in that space either……….just because you give something the name “SmartCloud” doesn’t mean it develops intelligence, does it ???

IBMer
June 25, 2013 at 12:40 pm

I’ve been working in IBM Brazil in services for the last 8 years. Since I joined to the company the quality of service has dropped to unbelievable levels. There are people so stressed with the workload that they are having heart-attacts in the meeting rooms, moral harassments is something usual, over time has been cut but even so some managers want people to work out of the business hours without no financial return. There are technical people who are working for many different customers in the same time and the customers thinks that this technical person is dedicated to his account. IBM has hired low (even without) skilled people to operate systems because senior people are documenting detailed procedures on how to deal with systems. Once documented, IBM can fire expense senior professionals and use those ship new hires as support. In the past years, the senior people who can move to another cities, companies or even other countries, have left the company because the work climate is ridiculous bad and the HR don’t care about people. The only thing IBM is worried about is the profit, the numbers. I really don’t understand why customers outsource to IBM their systems. They would save much money working with their own skilled workforce instead of what IBM has delivered. It is a pity what is happening to IBM because a so good company is being destroyed by the greed and incompetence of the executives.

Cringely: Short: You are more, than right. I might have left IBM already (4 months ago) but am still in touch with things inside. Things are becoming worse, people are fleeing the place, even first line managers tend to switching at least locations as noone really trusts the “Plan” anymore. Also, I had the joy of participating of the announcement of the 2015 plan: we were even forced listening to it, and how good and great this plan was. There was only one issue: It wasn’t told what exactly it will be and how regular worker it will affect. Yeah, close, but no cigar. (Oh wait, we were shown how bad HP does, but IBM is doing great! No, ignore Google, Google doesn’t exist, IBM is great, HP is bad, mmmkay?)

Global Services works… …but not really. Oh, did I mention, that PBC “payrise” have been reconstructed, so no real payrise will be given? Also, people with a higher paycheck (not really US or Western Europe based) are being given bad PBC for letting them go easier? Good move, right? Oh, wait, we can announce, that we have a young and fresh team! Yaaay for p(h)onies…

Of course you must do more without any payrise, but because your manager asks you doing so.
Don’t get me wrong, I loved the place, I have spent there more, than 10 years, but it’s crazy how IBM is eating up itself and it saddens me a lot, especially as management loves to put people in the dark and telling, that it’s the best place in the world. No, it’s not, and it’s a shame how IBM works recently.

It might change, but yes, it might be too late already.

good
June 25, 2013 at 8:16 pm

good news everyone

or is it everybody?

and what is wrong with .pl?

and wasn’t cringely somebody else years ago?

something about the X.?

Menon
June 25, 2013 at 11:42 pm

Crigely you got this so right. Outsourcing to India to non skilled workers is killing IBM . In time I expect all of North America marketing to be outsourced to India. By then, I hope most skilled NA employees, self included, are working for competitors.

Free
June 26, 2013 at 10:37 am

If by “marketing” you mean “sales”, even the idiotic management knows this won’t fly. Without sales people you don’t need managers and without manager you don’t need VP’s.

Besides it is hard enough to sell this stuff face to face, that remotely selling by call center staff double timing for a curry takeaway is impossible for anyone to think of it (even an IBM accountant).

Expect more bullying and bigger quotas. Until 2015 nothing will change because management is too paranoid of unexpected effects.

Only cost cutting remains as a viable option. EPS is a function of either increased profitability through revenue growth increases in excess of cost of revenue, or by reducing costs of revenue faster than the revenue decreases.

IBM has followed a growing revenue and profit to flat revenue with growing profit to dropping revenue with flat profit to what I would expect dropping revenues with massaged confused profit (drop) statement and a flurry of restructuring (I expect at the end of Q2 or Q3 ’11).

You can bet that the near failed sale of the commodity x86 server line to Lenovo would have an impact on one side of either equations.

The best way you and the rest of IBM employees have to change the course of the company is by using the key capitalist leverage a worker has, the withdrawal of labor. Not striking (that’s not capitalist) but by leaving for the competition (that IS capitalist).

If they are not loyal to you, why are you loyal to them? If you are valuable and not to tour employet then move on.

If you aren’t competitive in the market but know what you must know to make your comment then don’t procrastinate and hope for the best. Identify where you need to chane and do so at the cost of your current employer, then move on.

Bruce Mc
June 26, 2013 at 8:27 am

Every so often Cringely posts an article saying IBM is getting worse. That happens to a lot of big companies. Somebody remind me why I should care.

Free
June 26, 2013 at 9:47 am

As an ex IBMer (I left a month ago – not part of the RA) and having seen the company change after being acquired twice by them, the IBM equation has worked for me. I got fat stock options and retention packages in both cases and left again after they expired.

I have watched the incompetent, nepotic and inbred management team blunder through the same 3-4 year cycles. Most of those in sr. management have been there for 15+ years and are well protected from above and below. Above are more managers and below are a slew of disposable employees.

I have seen IBM under Gerstner and then Palmisano/Rometty. You can tell how the old guard has taken over the reigns again and has enjoyed the trajectory the more cerebral Gerstner put them on. Palmisano was a master schemer. His background was all about that having come up through the hardware division.

Rometty is but the last step of his scheming – just see the RSU he scored compared to the ones she’s on and who set the boat on an unsustainable course and jumped off when it was clear there would be more icebergs than open water ahead.

The employee base is underskilled, undermotivated and underpaid because of chronic underinvestment. All the internal (dis)enablement is so weak and underfunded that it clear it is a mere veneer of appearance. If you judge the salesforce by the training targeting a 10 year old veteran profile, if is easy to see how either management’s understanding of field sales is limited or the average skill level of the force is woefully inadequate.

The software group (highest profit margin area) is under huge amounts of pressure. You can see this by how they stuff so much unneeded product in their substitution lists in all the large Enterprise License Agreements. You can see this by the way their salespeople are pressured (beaten) into submission and for the first time in my career I have seen a sales force solely driven by a spreadsheet. The salesforce is woefully underpaid but seem to be happy when they are offered symbolic pay rises with more strings attached that a fly in a spider’s web.

You see, IBM is an enterprise infrastructure vendor (despite their fantasy of wanting to cater more for the mid-market) – in the software world, this requires a special breed of sales skill and mindset. Not transactional (like order takers selling Microsoft) but much more knowledgeable expert sales people. Especially in the Tivoli and analytics area. IBM has managed to break this down and “sellers” are now pressured to just show their $200K per month. There is no long term pipeline, domain expertise has been destroyed (they just love to see sellers as door openers) and there it endemic top-down mis-trust of the organization.

In the Tivoli group, their portfolio includes some 350 products, where the top 5% produce 85% of the revenue (talk about a deadbeat, antiquated portfolio). To show relevance and growth, they have repackaged a bunch of moldy service (mis) management titles into the “SmartCloud” moniker. They report to analysts and the market about how much cloud has driven growth – well they should audit how many of the SmartCloud (SC) products are ACTUALLY being used in a cloud context, vs. being used as their old package in a traditional datacenter context.

The Pure systems are nothing more than the old server technology (with iterative technology advances) and pre-packaged application stacks (including configuration) – some are even just virtual machine images – I loved the implied sophistication when the word “patterns of expertise” were used – this idea was pioneered in the open source world with the LAMP stack (Linux, Apache, MySQL and PHP).

IBM’s huge cost savings could be achieved by changing their internal IT – they are doggedly hanging onto two dinosaurs of IT, Lotus Notes and Siebel (the latter just being replaced by a Sugar CRM derivation). This drives up the cost of sale hugely. Notes is hugely inefficient and their CRM mess requires them to have different tools for reporting, forecasting, planning and customer views. All this work is pushed down to the salesperson as opposed to back-office (they got rid of those in the early 2000’s) and doing cadences with line managers, interested parties and anyone who needs direct first hand data are the norm, so much so that one could reliably speculate 40-50% of a seller’s time is spent in internal management.

Nobody cares. Too many insignificant, yet protected and well paid jobs go to the ones who can correlate data from multiple data sources and create a single view in excel for some manager who needs it to justify why they exist.

The whole account management “stack” has fundamentally changed from the kind Steve Ballmer wanted to build at Microsoft in early 2000 (long tenure and deep relationships) to one where they are all gate keepers. IBM blames their salesforce for not speaking with customers (let alone new ones) enough. That’s because those selling actual solutions are being kept out by account teams who are keen to justify their existence by being gate keepers.

Unfortunately, this is not unusual in the evolutionary cycle of many now large software companies. You can see how HP headed in the same direction followed by Microsoft, Oracle et. al.

Their services organization are an utter joke – their DNA is firmly fixed in the early fat client-server era and are so process heavy that they stumble over their feet all the time. I have seen them do asset inventories by walking hallways and spending months when a simple software tool would have done it in a week (and with much more precision). Look at how many competitor’s products they use (HP, BMC, Microsoft) so deliver their services instead of their own Tivoli tools.

Look at how much “local” resourcing they use vs. temporary foreign labor imports that are seconded from their foreign labor reserve pool. The services group made its name by outsourcing public sector IT (read people incompetent enough to need someone else to run their IT) and restricting it so much that it teeters on the edge of failure. In the private sector most of their contracts (you can see many listed failures in earlier posts) are continually re-evaluated. I have seen a huge number of banking sector clients literally move off IBM by implementing new technologies outside the scope of the original IT outsourcing agreements.

It is a misery to see such a great brand, which in the past century managed to survive all the alleged reporting of mixing in with less desirable aspects of the 20th Century history (Nazi Germany, Apartheid South Africa etc.) fall to its knees because of being failed by inbred management.

Gerstner broke the mold, shook up the business based on good business principles (he was not a technologist) and set it on a solid trajectory only the blundering back-stabbing old guard took 2 decades to break down.

I think IBM needs to ensure management always has some 50% of fresh blood to ensure it changes with time. It needs to shake up the management team and move out the 30+ year veterans that still have fat pension plans and are protected from any mistake. Nepotism is so visible especially when you have family relations of senior managers enter the workforce and out pace their peers. I have seen only one principled child, refuse the “parental accelerator”, then leave for a better paid position with a competitor.

It is a culture that clearly shows the existence of an inner circle and “everyone else” and it is failing the one party they, themselves market as being at the forefront of all strategy – the shareholder.

goinggoing
June 26, 2013 at 1:08 pm

What an insightful and totally accurate assessment. Speaking as someone who has been on the inside of IBM for almost 20 years I can confirm to other readers that your remarks are absolutely spot on.

To cap it off, today, on the two week anniversary of the “resource action”, I was offered an IBM contract position doing almost exactly the same thing about two cubicles over from my old virtual office. Cogitate on that little factoid for a sec…!

DR2
June 26, 2013 at 2:30 pm

Well Cringely, there’$ many of u$ that have predicted thi$ $ad $state of affair$ for a long time.

For starters, that idiot from the bakery (you remember a guy called Gerstner?) actually told a product manager (Tom Jarosh) to NOT GROW one of the most dependable, stable and reliable products that IBM had (The AS/400), but to MANAGE IT’S DECLINE…and so we all said soggy noodles to a really incredible product…

Another of IBM’s major areas of massive stupidity is it’s total lack of any credible marketing and product support. GONE are the days when you worked with IBM as A TEAM…It’s now good f’ing luck if you can even find your local rep – forget about any offices anymore, they all work out of their cars!

You’re also forgetting, IBM IS A SERVICES COMPANY…Hello Robert, this changed A LONG TIME AGO…IBM is much more interested in maximizing it’s services revenue than it is in being a team player with a client…like in the old days…and considering that they are generally by far THE MOST EXPENSIVE vendor on the block, well, you can see why it’s easy to undercut them…even if you’re as expensive and top heavy as an Accenture…

People who have built their lives and careers on IBM platforms are tired of seeing the rug pulled out from under their mortgage payments and kid’s college funds…just because IBM wants to maximize it’s services revenues…and abandon systems and platforms that are SUPER SOLID, SUPER STABLE and SUPER EASY TO USE…for those that, well, you guessed it, mandate more services revenue for IBM…

MANY of IBM’s former clients and soon to be former clients don’t trust IBM to be there for the future of their firm and fully expect IBM to pull the rug out from under them by forcing a migration that undoubtly be very expensive.

Then, there’s the education system…something whose existance IBM is totally unaware of yet people like Oracle, Cisco, Microsoft, et al, are flooding with their products and eating IBM’s breakfast, lunch and supper.

FACE IT IBM: You learn your trade in school. People use what they know, they hire what they know, they BUY what they know…they’re NOT LEARNING IBM IN SCHOOL….and that is totally IBM’s fault!

I’ll never forget a meeting I was in where a school teacher BEGGED Gerstner to put IBM in the local colleges like Windows was being flooded in them…Gerstner was to busy making crackers and planning his retirement evidently…and people subsequent to him have yet to learn from his mistake(s).

It used to be that you couldn’t be fired for buying IBM…nowadays people will look at you again if you even suggest them over: Micro$oft, Oracle, etc., et al…

IBM’s biggest days are gone. Unless it really gets its shit together in a big way and really soon, It’s going to be another HP or perhaps worse yet…DEC…it’s all a matter of time…

Wow ! I hope they have insurance to go with that decision when things go down the proverbial toilet….after all Ginny must have had some serious leverage to get this contract given that IBM keeps threatening to close down offices and put European workers on the street yesterday………..just hope it doesn’t come down some poor kid plugging his finger in a dyke to stop a flood………

Almost gone
June 26, 2013 at 5:45 pm

Since Gerstner left, IBM has resorted to the old habits of bloated layers of management, non responsive management, and plain old poor or nonexistent management. I swear this is true. I had a 2nd line manager who promoted one of his managers to a project manager and then started calling himself a 3rd line, hoping to be promoted to a Director, and of course he was. I used to have 4 managers between me and Gerstner, now, I have no idea who I even report to after my 3rd line. I think there are 8 layers now, I have no idea what any of them do except run status meetings and travel back and forth from the US to China, Singapore, and Mexico. I have had the same manager for almost 4 years and I have never met them in person. Yet, they rate me, they rank me, they decide if I am a good employee or not. It is a joke. The company is being run by accountants and it shows. The customers will soon see this and start bailing even faster than they are now.

Glenn Gundermann
June 26, 2013 at 7:47 pm

IBM support has always been amazing and still impresses me today.
IBM software has never been better. From operating system (IBM I) compilers, development tools (RDi) and everything else.
IBM hardware can’t be beat and they continue to improve it. I’m specifically referring to the IBM Power System.
I can’t help but thinlk people have a hidden agenda with such negative talk.

BeenThereDoneThat
June 26, 2013 at 10:03 pm

I’m not sure what that “hidden agenda” would be. A great number of posts here are from current or former IBM employees who simply have a different perspective than you do, and are quite open about sharing it. Nothing hidden here. If you think everything is rosy at IBM, I’m happy for you.

Godzilla
June 26, 2013 at 10:48 pm

If you don’t like IBM don’t buy IBM. What was so hard?

Ronc
June 27, 2013 at 5:09 pm

This column is about the employees seeing a train wreck in the process of happening. Neither Bob nor the employees are in a position to “buy IBM” You should say “don’t work for IBM”. But once you’ve been trained for one job, or once you reach a certain age, it’s difficult to switch jobs.

Ronc
June 29, 2013 at 4:13 pm

I may have misunderstood the original comment. Perhaps “don’t buy IBM” means don’t buy IBM stock, which makes sense for anyone not investing through a mutual fund.

cjh
June 27, 2013 at 6:15 am

Our agency still runs a mainframe using CICS and several COBOL programs created back in the early 90s but the goal (or at least I believe that’s the goal) is to create new systems/apps for all of them and transition over. It just is taking a *while*… We also have a pile of Lotus Notes databases that were created some time ago and I expect many of those will take awhile before users let go and we replace as well.

With that said, I don’t think anyone would say they are “satisfied” with any of it (possibly some of the Notes users… due to some features). I know one of the COBOL systems I’m tasked with replacing is just enormous and the guy who built it says he can barely maintain it due to its size 🙁 Gotta love that sort of response.

Wow, this has turned into quite the bitch session. Reading the post and scanning the comments, I’m still searching for the benefit of the thread. Perhaps this is intended to be an open letter or even an open petition to IBM Senior management? Or is it just a bitter outlet to deal with the RA. I’ve never been an IBMer, but I have been on the wrong end of RAs and I have watched my job get moved to India. It sucks. It really sucks.

For what it’s worth, IBM isn’t the only company to do seemingly stupid things like this. You might enjoy some of the rants of the anonymous Microsoft blogger at http://www.minimsft.blogspot.com/
In the end, what is your goal here?

BeenThereDoneThat
June 27, 2013 at 9:55 am

I don’t know who you are addressing your question to, Dave, but a lot of us have just had their lives disrupted by a company to which we have given years of loyalty and hard work only to be dumped for the sake of a short-term gain and in reaction to a quarterly profit that was 5 cents less than expected. We are here to share our perspectives and maybe gain some understanding of what has happened. We certainly won’t find that on w3 (the internal IBM web site) or from our management. Thank you for your understanding.

Alex
June 27, 2013 at 7:52 am

I do also see some quite brilliant technology. The core product I deal with – DB2 – is still sound and world-beating and grows better, richer and stronger at each release. IBM Support – for this product at least – leaves all competitor helpdesks in the shade.

Reading this page is like watching a Greek tragedy, because it all rings so true. I’ve staked an IT career of the last 25 years on IBM products and platforms, latterly as an independent DB2 consultant. It really is alarming to see what is going on – not least a host of poorly planned, badly designed, under-tested, badly documented software packages released to market too early; offshoring to underskilled, uncreative, unimaginative overseas development teams who cannot even write coherent English; employees sent as ‘consultants’ to client sites that I have had to end up teaching!; the utterly shoddy way employees have been treated and UK employees bamboozled out of their full pension rights; games IBM plays with contractors and clients and so on. There are still many first class technical people on the inside to whom we should wish all the best; but it’s in a sprit of ‘pessimism of the intellect, optimism of the soul’.

commentator 209
June 27, 2013 at 11:43 am

A good barometer on bob’s columns are the number of comments. When I started this comment there were 208 before me. This must be a noteworthy column. But why?

There’s an old joke … After you shake hands with Thomas Watson you should count your fingers.

Yes IBM and the computer industry in general have a long history of over selling something, making too many promises, etc. Why is the current situation different?

Up to 10-15 years ago a lot of the computer technology we use today was in development. Things simply didn’t work right or with each other. Things didn’t always work. If things got really bad and IBM was responsible for the outcome the company to its credit would take responsibility and work the problems. IBM had a lot of strong technical resources and in a crisis could bring in a lot of impressive help. IBM would try to make things right and that earned them a lot of points in corporations.

Today the systems, the operating systems, the networks, the databases, etc all work quite well. They have all the important features and capabilities. Most of the bugs have been found and fixed. The technology works. Getting the technology to work is no longer the problem. The problem today is much simpler and much more basic. You still have to buy equipment and software. You still have to install and set it up. You still have manage projects to bring new applications online. You still have to support the applications. It is in these basic jobs that IBM today is failing. They can’t do the easy stuff.

In the past when you were doing something new, something for the first time problems were to be expected. Today when you buy a system from IBM it should be like a car. It should just work. It is completely reasonable for IBM’s customers to expect the things they buy from IBM to work. When you hire IBM to support your applications, your intent and expectations are pretty clear. Does IBM really know how your application works? Do they have the right people lined up to provide you the support? In most cases — NO. IBM’s services have become a trial and error process. It is based on things breaking, both with the customer and with IBM. The support people are minimally and narrowly trained. They will get stuck. They may or may not ask for help. The help may involve a different skill that IBM may or may not have. If the problem get big enough an army of IBM exec’s will step in and “manage the situation.” When the problem is fixed, IBM will not go back and fixed the things that caused the problem or caused the delays in getting the problem fixed. IBM’s business model is based on under serving its customers. There is no desire to do a better job, improve, …. Imagine if your car dealer did the same thing. You didn’t get the car you wanted. The car has lots of problems. It takes a long time to fix your car and a few months later the same problem pop’s up again. It is only a matter of time until you go shopping for a different dealer. The only thing that is saving IBM right now, is the competition is performing as poorly as IBM. But things are changing. Firms are beginning to in-source their IT operations. Firms are beginning to use local or regional IT support firms, firms who have a vested interest in their people and keeping the customer happy.

IBM is deceiving its customers and it is only a matter of time until it becomes publicly obvious. The deception comes from IBM’s board room. If you are doing business with IBM today, you should periodically count your fingers.

Drew
June 27, 2013 at 2:21 pm

Comm209 – Your comments are spot-on. It’s becoming apparent by the day, that the traditional managed services model will be completely gone in <2 years time. We see a steady stream of contract exits and customer in sourcing (which basically means the customer will now deal directly with the lowest-cost Asian sub-contractors they can find – and eliminate any US-based middle tier overhead).

It's really a shame. If managed properly, the services business could have been profitable and efficient. Instead we have unscrupulous sales and acct leadership who sold contracts with unrealistic SLAs , unproven solutions, and bloated staff counts that eliminated any hope for positive revenue gains. Once these deals are signed, these people take their bonuses, and proudly continue this destruction across multiple accounts. We have countless layers of management, each building huge empires with apparently no one at the Exec level interested in a) what people are doing, b) how many people are actually needed, or c) the horribly unbalanced P&L meter for each account. On my account there is no urgency to fix anything. When the accounts get to this point, the only hope for any tangible revenue is to bill the customers into submission until the entire portfolio is dead.

Unfortunately for US-based IT workers, the traditional services model provided by IBM, HP, etc is now history. Cloud services from other providers with less human-intensive support models are winning the game – primarily with off-shore support.

IBM, HP and other legacy providers were late to the game, and now must spend valuable time dismantling the mess they’ve created.

Michael G
June 27, 2013 at 3:24 pm

I wonder if since there big shift to IT services as their main impetus that this is also just the inevitable result? When I started in IT you hired a contractor to come into your business because you had no expertise in a given area. Rolling out a large extension to your network, adding an AS400 to the mix, moving from XP to Win 7. You hired that outside company and it cost you. Their services came at a premium. Somewhere along the way, someone got the bright idea that not just specialized skills but we can give you expert regular skills to run your network, with a big company standing behind you at a cheaper price! Companies jumped on the bandwagon. Now the company I worked for not IBM, had offices out of town, never came to the site except when contract renewal came up or there was a problem with the site manager. I never saw any kind of support from the home office, not software tools, or operation manuals, nothing. Now the customer got pretty good service, but that was despite the company they hired, more they got lucky with the people who maned the different positions. My point is this seems a little like rents to me, not a real service that adds the productivity of any individual company. With a company moving so much of the support staff to India and such, and relying on essentially software to take up the slack, it just acerbates the problem. As this situation gets worse and worse and the CFOs realize that IT is after all a very important component of a corporation again I think a lot of this outsourced IT will move right back in house.

Michael G
June 27, 2013 at 3:37 pm

I also wanted to add my recent contact with IBM. I am looking for a job and several times over the last couple of months the phone has rung, I’ve answered and it was an obvious person from or in India saying they found my resume on X and I would be perfect for a job they had. Well just the other day when this happened the person had the thickest accent I’ve heard in some time. Now I have traveled a lot in my life so I have an ear for such thing but calling over a cell phone, and their think accent made the whole conversation trying to say the least. They were offering me a job with IBM. Now this kind of perked my ears up. The mind started going through the index cards, didn’t IBM have their largest division a outsourcing IT business? Didn’t they have their own staffing as part of that, why this outside vendor? I had already decided from previous encounters that hiring must be outsourced to phone rooms in India anyway, but this was confirming it.

Now the guy wanted my latest resume, which of course they already had, so why? Next they sent me the briefest of prospectus of the job, literally 4 lines of text, and a statement from me that I had qualifications for those 4 lines and that I would work for $35 an hour flat rate with no benefits. Next I was sent a statement confirming all I had said and that I would only consider his company to represent me in this job search? WTF? Now after doing all this I got not one more phone call?

This whole arrangement makes no sense. If your going to hire a company to do this for you wouldn’t you trust that they had a decent candidate and talk to them? What is IBM doing messing with this? Who can a person in India who has little cultural or even communication skills do this job, this whole arrangement just makes the mind real. IT in general is in deep do do!

Drew
June 27, 2013 at 4:20 pm

Michael – Don’t believe for a minute there was any intent by this person to get you hired. I’ve had the exact same thing happen to me several times. Recently, a (well known) International Recruiting Firm contacted me for a tech role with a large US Company. The recruiter was a clear English-speaking Rep from NC. They gave me the same rundown – brief desc, salary, confirmation of representation, blah blah. They also told me ‘the job was a telecommute position – no specific location required’. They quoted a generous hourly rate, although I would have been open to accepting a lesser amount to help my chances. Of course this discussion never occurs with US based candidates, as we’re assumed to be ‘too expensive’. I never heard from them again. After a few searches, I noticed this same recruiter had the same job posted on their Mumbai India Division Website. What I took away from this was that the recruiter was either a) required by law to speak with a specific # of qualified US based candidates before offering the position to an off-shore candidate, and/or b) is just collecting my resume info for quotas, or resale to other firms. Either way, if the position is posted both in US and India (which I’m finding more commonplace), you have absolutely zero chance of being hired. Watch out for most of the recruiting firms on Indeed, Monster, etc. They all operate this way.

So my question to this audience is: what is the purpose here? Is it to share empathy and sympathy in enduring a major life-event? Is it to damage IBM’s reputation in retaliation? Is that why so many are posting anonymously? (counter to the “nothing hidden here” reference) Or is there an intended positive outcome here? If so, what is it?

MikeN
June 27, 2013 at 9:26 pm

Why have you illustrated this post with a merge of Condoleeza Rice and 1992 Hillary Clinton?

I am an IBM Exec – a middle ranking one. Unfortunately your column is correct is most respects. IBM’s Armonk management have lost the plot. The company is now run by clueless, out of touch bullies. It hurts to say it but its true.

anothervoice
June 28, 2013 at 3:24 am

another senior IBM voice here – Mr Cringely – you analysis is 100% accurate – to the vast majority of folks who have commented – you too are correct – frankly folks IBM is in a death spiral – I’m not entirely sure when it’s going to hit the ground and become nothing more than a big smoking hole – but my insider’s educated guess would be 5 years at the maximum… what an absolute shame – it breaks my heart – I’ve spent the best years of my life working for a company that I was so proud to belong to – now it’s frankly a sick joke. My advice to those on the inside – get out while you can – it’s easier to find a job while you’ve got a job instead of waiting for a redundancy and then struggle to find something else… good luck to us all.

Thats What I Did
June 28, 2013 at 7:18 am

That’s what I did a couple of years ago, after working 25 years for Big Blue. I remember when I began my career with IBM, telling my friends and family that I was an IBMer. Oh how proud they were, and so was I. Then over the years, I began to see the erosion, competent execs that you looked up to, respected, even liked for the most part, being replaced with BULLIES who didn’t have the technological savvy to boot their laptop most days. Then the lies began to surface, management telling the workers to ‘book 30% overtime, no matter what’, or ‘bill your team meeting time to the customer’ or other such ridiculous tactics. Of course, they would never put it in writing. Good folks getting laid off for no other reason than to prop up EPS. Then I would go to the Yahoo insider trading board and look at the disgustingly large stock grants being given, and immediately sold, by these same bullies. There simply were not enough Tums in a drugstore to handle it anymore, so I left and found a place where people work hard, get along well and are appreciated as genuine human beings, not ‘over-banded resources.’ Shortly after I arrived at my new position, we had an employee appreciation day. I was walking around (sort of in shock) watching people enjoying their company provided lunch, chatting, being thanked repeatedly by the leadership. Folks must have thought I was a zombie – I just stood around and stared in amazement by the whole affair. Why? I hadn’t witnessed that at IBM in YEARS. The only interaction the workers had with the bullies was listening to them yell at and berate subordinates on conference calls. Needless to say I drive into work quite giddy every day realizing where I am now (a healthy organization) compared to where I spent 25 years of my life. It’s called ‘downward comparison’ and the term fits appropriately. To echo the previous comment, if you can, GET OUT now before you can’t.

Exec_Retribution
June 28, 2013 at 8:01 pm

Bob Moffat who got caught in a scandal of his making by his own arrogance and greed was one such bully……..always spoiling for a fight, power hungry and the eternal lust for money. Let’s see what happens to the rest (Palmisano, Rometty, Daniels, De Leo, Mcdonald and the rest of Senior executives) of mean, arrogant evildoers…….chances are they’re going to take a fall whether they are associated with IBM or not ……..remember, you reap what you sow. It’s that simple, not complicated to understand.

BeenThereDoneThat
June 28, 2013 at 6:39 am

To Dave, thanks for the reply. I read your blog posts and see that you have experienced some of the pain that we are going through now.

I can’t speak for the others here, but for me this feels like the end of an abusive relationship. One where I have faithfully given my best efforts only to find that my partner was cheating on me all along and planning to replace me with someone else (been there). During my time with IBM I have turned down opportunities to make extra money due to IBM’s “no moonlighting” policy. Just three months ago, I turned down an opportunity to interview with a competitor who was taking over a contract that IBM lost. I did that because I value loyalty and long-term relationships over short-term gain. And now IBM has shown that their values are just the opposite.

The chances that my words will influence IBM in any way are next to nothing. But if one other ex-IBMer reads this and is comforted to know that they are not alone or if one potential employee or customer considering a relationship with IBM reads this and makes a wiser choice as a result, then I will have accomplished something.

Max Laadvermogen
June 28, 2013 at 7:05 am

I think you are mostly right, and I loved your term ‘management corrosion’… so true

but i also think Wall Street has already caught on already after last earning release of IBM, and put IBM in the technology ‘rust belt category’ and mentioned it was stuck in ‘a legacy business model’.
Same btw is happening to Oracle and Larry has responded with a flurry of partnership.. hardly a growth story and you saw that the stock did not respond at all.

Both IBM and Oracle lack a simple & understandable growth story that WS can pitch investors, hence stock will only drop…Since we are midway 2013 I do not think investors will allow IBM to continue on this disastrous course and make 2015 without a convincing growth story… in investment terms 2015 is too many lightyears away. Stock will drop drastically before year end forcing change.

Smarter Planet is not a product, it is a vision and visions do not sell software

Ginny, are you reading this stuff? You should go see Bruce Ross and ask to see the list of “code red” accounts. You should then go find out what is really is happening on them and how YOUR VP’s are making things worse instead of better. You want more revenue, more profit, better client experience, etc. They don’t get it and are pulling down all of Global Services.

ginny
June 29, 2013 at 10:34 pm

Hello guys, Ginny here,

No, I don’t have all the answers for you. What I will tell you is that the customers in our Global Services Accounts are pissed, are fleeing, and there is no way for IBM to improve the situation in it’s present form on the big infrastructure accounts. Basically folks, we need to have 100% of the Global Svcs staff off-shored, at a much lower hourly rate than IBM can directly offer the customers. We cannot maintain business model in it’s current form. The Asian Sourcing firms are relentlessly pouncing on this opportunity, and offering much lower rates than IBM can compete with in this arena. I’m afraid we are doomed folks. Good luck to all of you, and have a nice life.

Murgen Templar
June 28, 2013 at 9:21 am

Working on infra delivery with IBM as IT Vendor I can only say: how sad this is all true.

Another on inside
June 28, 2013 at 11:18 am

The VP response is accurate, as is all the IBM commentary by Robert. I am equally close to decisions in software. Too many chiefs covering themselves and ensuring their career growth, vs driving the business. The latter only matters in quarterly results, not business decisions.
IBM hires more execs and lets go more of the doers. That is the MO and it will continue. India has huge dev turnover so output is down, as is quality.

I had hope Ginni would be different than the train wreck Palmisano. However if there was any indication of that this was a false hope, it is the treatment of SVP Adkins whom should have been retired instead of given a new position.

IBM only knows how to sell concepts, not build and deploy solutions.

… And has no idea what they are doing with cloud. Case in point, oracle just made their dreams of being cloud relevant irrelevant. Kudos to the samurai CEO for covering his own poor cloud strategy with those deals. Mills has no clue about software and has shown this. Dump your stock, leave the deck chaors and get into the life rafts.

Mills_sycophant
June 29, 2013 at 4:11 am

Adkins likely survived his “stay” in STG and moved on to a safer haven, because he likely had something to bargain with (care to speculate ??) ……………Steve Mills never had the talent when it came to picking good executives. He picks the people with the worst psychopathic personality disorders (which is funny, since I read that he used to be a psychologist at one time, so you would have thought he could pick the best). No wonder SWG is a frightful mess and going through a major reorg. because if the “senior” leadership is clueless, you have layer upon layer of middle managers (more clueless MBA and PMP bean counters) doing nothing more than passing the almighty buck and who are totally out of touch with where the rest of IT world is actually heading (and it ain’t Kenexa !)………, then you are in some serious trouble !

SamP
June 28, 2013 at 2:06 pm

Ginny, are you reading this? Is anyone in IBM PR reading this and reporting it to the exec?

The problems are great. Our customers are mad. We are scared for IBM’s future. The business is based on a house of cards. It is only a matter of time until it all comes crashing down. What do we have to do to get your attention and get IBM back on the right truck?

Listen to us. Lets work together to save the company.

Shannon
June 28, 2013 at 5:04 pm

I’m an IBM employee….I only graduated college six years ago. And in my time here, I’ve become so disenchanted with “Big Blue”…it held a prestige in my mind, but I’ve come to find that they screw their employees (the 401k bomb they dropped right before X-mas, the layoffs) and quality has gone out the window in order to meet totally unrealistic schedule dates. Management seems clueless about anything technical…it’s a clue when one of my past managers doesn’t even know how to ftp a file off a remote server…what?

This was the first really big layoff I’ve gone through…with the meetings, etc, etc. There was one early in my “career”, but I wasn’t involved in meetings, etc. A LOT of people I work with, who are hard workers and are needed, were let go…people we were all surprised about! I survived this round, but probably only b/c I’m young and don’t cost much. A lot of “retirements” have been announced. It is a wake up call for sure and I don’t plan to last another year if I wait it out. They’re moving a lot of labor to Mexico and I’m sure that’s where my job will eventually go. I’m planning to look for a better job with a better company who doesn’t cut the worker-bee’s in order to make profits. We are the ones designing, developing, testing and supporting the products, yet we’re at the bottom of the totem pole. We’re let go while the ones at top get rich. I hope they do pay for their illogical and stupid business decisions.

Also, this article hit right on point with how the employees are treated in this company. We are told nothing about the plans, about how many were laid off, nothing. It’s like we’re children listening to what mommy and daddy tell us to do because they said so.

Analuest
June 29, 2013 at 10:15 am

Job-Losses in China confirmed:

Although the company avoided giving any actual numbers, a report on local Chinese news site tech.qq.com suggested IBM is expected to axe at least 500 staff on the Chinese mainland, according to China Daily.

No, I don’t have all the answers for you . What I will tell you is that the customers in our Global Services Accounts are pissed, and there is no way for IBM to improve the situation in it’s present form on the big infrastructure accounts. Basically folks, we need to have 100% of the Global Svcs staff off-shored, at a much lower hourly rate than IBM can directly offer the customers, all the while maintaining our present business model. The Asian Sourcing firms are pouncing on this opportunity, offering much lower rates, and I’m afraid IBM cannot compete any longer in this arena. Good luck to all of you, and have a nice life.

SamP
June 30, 2013 at 4:33 am

Geez Ginny,
just like you to drop a bomb like that on the rest of us on a Sunday…..but that’s why the IBM Board and I voted for your huge pay raise this year; yes and that is why you continue to get the big bucks. With the Clementi and Karlingen fiefdoms gone, there will be more for us at trough, no ??? We’re counting on you to do the right thing here, and to hell with the rest of the peons. We’re the bluebloods who keep the company and game going to the end.

Now get back to work and find some more fat heads to roll for the next quarter……..and remember, now that we have found out about how much fat our management has, we can squeeze them all the more and it will be easier than getting blood out of a stone;so no excuses for laying waste to whole middle management divisions now. All the name of Agile management, trimming the fat and cost cutting.

See you at the next Board Meeting !

Ginny
June 30, 2013 at 3:09 pm

A more appropriate and believable response from the beloved CEO Ginny Rometty would be “you’ve obviously confused me with someone who gives a damn.” Lets face it, IBM’s exec’s clearly don’t care about the company, its customers, its employees, its reputation, …. If we think complaining to them or about them will make a difference, it won’t. Their minds are made up and they don’t want to be confused with the facts.

The only way IBM will change is if its customers rebel in large numbers and/or if Wall Street wises up starts dumping IBM’s stock. It has to be public. It has to hurt. Unfortunately 10,000’s more IBM’ers must be hurt before the message sinks in and is accepted.

Freshen your resume. Put aside all your feelings about IBM. Purge yourself of all negative feelings. Then move on to a better employer and career.

drew
June 30, 2013 at 9:51 pm

Ginny – re: Global Svcs, what you and others commenting here are missing is this;

The current Services model that charges clients $40+/hour to support their infrastructures with U.S. Based resources, is no longer WANTED BY EITHER THE CLIENTS OR IBM. They BOTH agree this is an unworkable solution going forward.

IBM, etal, have tried to offer off-shore rates that are much lower, using bottom-of-the-food-chain, untrained , college freshers out of India.. Interestingly enough, the clients while complaining, have tolerated, and will continue to tolerate these individuals to run their business tech – as long as the price is right. The clients now know they can get a better rate by directly dealing with the Sourcing firms. The problem is, IBM, etal, still must to add their overhead costs to these workers, making the whole model unattractive and unworkable to the customer.

The new ‘multi-sourcing’ model is basically just the client dealing directly with these Sourcing firms, essentially cutting out the middle man (i.e; IBM, HP, Accenture, etc)

To counter this loss of business, IBM, HP and the other legacy providers all think they must provide some semblance of a Cloud business model to have a tangible stake in the future Svcs game. Unfortunately, the up-front infrastructure, appl migration and project costs will be huge. Margins will be MUCH lower in the end.. The legacy providers have already admitted this will ultimately be another commodity business, and will likely be an unwinnable battle in the long-term.

Folks, you can whine about ‘IBM not caring for the Client’, or ‘Mgmt doesn’t have a clue’, blah, blah, but the sad reality is that IBM and others MUST exit this legacy business model, as it cannot sustain itself in it’s present form. The customers are exiting because IBM and others are ASKING THEM TO, and the Customers are more than happy to oblige.

John
July 1, 2013 at 5:32 am

I can agree to this to a point. Yes customer want lower costs and will endure much to get them; and IBM is trying to comply. In every other industry for 100 years labor costs have been removed through efficiency and productivity improvements. Over time it takes LESS workers to do the same thing. In the I.T. industry and in the services industry, they still support systems, networks, and infrastructure by throwing bodies at it. About 15 years ago IBM made a conscious decision to go cheap, to let things fail, to pay the penalties, and to maximize profit. The industry as a whole marched in that direction.
…
Here’s the risk. The quality improvement methods used in the electronics and auto making industries work well in information technology. Someone is going to figure that out and begin to make a big difference in the quality of service. They will provide vastly better service with fewer workers. With fewer workers, bargain basement pay will be needed. They can hire good people, pay them well, retain them, and that too will increase the quality of service they provide.
…
The other risk. At some point service gets so bad it damages one businesses and insourcing becomes a serious consideration. You get what you pay for. Some firms can get by with poor I.T. services, to others they NEED I.T. to operate and compete. Go back a couple months and look at Mr. Cringely’s column on BestBuy. Poor I.T. is seriously hurting them. I visited a BestBuy store over the weekend. It was sad. They clearly do not even know what should be stocked in their stores. I did find the item I wanted BestBuy’s price was 3x the price of others. Their I.T. systems are so poor they simply don’t know how to run the business.

Anon
June 30, 2013 at 6:15 pm

Dear Board of Directors, please Ctl-Alt-Del Ginni like you did John Akers.

Let’s be realistic here: it’s less important that IBM succeeds or fails. What’s more important is that Microsoft fails. Microsoft is the evil empire and must be destroyed at all costs.

John
July 1, 2013 at 12:11 pm

Today one can say the same thing about Google or Apple. You need to go back a few years and read one of Bob’s columns on Microsoft.
…
You should not make business or life decisions based on being against something. You need to decide what it is best for your business and what it needs to be successful. Then and only then pick the tools and technology you need to get there. Microsoft may be a part of your needs, maybe not. It is important to make the right decision for the right reasons.
…
Yes, Microsoft has been a pain. However they do have some good and useful products. Don’t make emotional decisions. If Microsoft has something that can help don’t hurt your business just for spite. When your decisions are based on being against something, chances are you are hurting yourself.

Microsoft what ??
July 2, 2013 at 7:19 pm

Hate to break it to ya but Microsoft ain’t the biggest kid on the block any more any more than it represents the biggest “evil empire” – that was 10+ years ago. In that time Google, Facebook, Red Hat and lots of others have evolved and with the missteps made by Microsoft executives, the market has continued to evolve without Microsoft domination…..IBM too will cease to be relevant if the executives continue their course of missteps and failed strategies – that comes with the territory. A stock with a price of $190+ will drift down into a rapid spiral if there’s nothing to hold it in place………

LongTimer
July 1, 2013 at 2:02 pm

i had a lunchtime discussion with some summer interns. They wanted to know what it is like working at IBM? I’ve been working here longer than how old they are. I told them to look at http://ibmemployee.com and http://www.endicottalliance.org. Several days later when it was my turn to host them again the discussion quickly turned to what they read. The consensus was they understood – eyes wide open, and if they receive an IBM offer and accept it. Their plan is to take the IBM experience for what it is and build on it else where. To them IBM now is a line item on a resume’, not a career.

BarneyFyfe
July 1, 2013 at 2:07 pm

Folks, as an employee, I have posted several replies to comments. The profits are nothing more than reducing expenses. Revenue is non existent since Obama (anti capitalist that he is) has been in office because no big business is sure of what to do with pending health care changes and other regulations/taxes looming. This is also a general statement regarding most fortune 500 companies. Wall Street is posting crazy unsustainable (bogus) figures that WILL come crashing down.

IBM is cutting expenses. A billion dollar company and I have to beg for an ink cartridge for my printer and will probably not get it. Go figure.

My short term predictions of 12 -18 months:
Severance package will be reduced to 13 weeks.
Cash balance plan (the second iteration of a retirement plan) will be dissolved with some formula of a lump some to be placed in their existing 401k (I am sure lawyers are working with the feds to ensure that they will meet the obligations of current laws). This will free up tons of cash because the formula will ensure IBM comes out ahead.
IBM will decide to not offer any medical plan options and mandate all employees use the obamacare plan. IBM is in bed with the Obama administration and in fact did meet personally with Obama shorty after his first election. This will also free up tons of cash (read cost savings – reduced expenses – read phoney profit – read phoney wall street nonsense)

:sarcasm on. I bet IBM would love nothing more than to have all employees become 1099’s :sarcasm off

I loved working for IBM for 28 years but I am now toast and leaving on my own. I cant take it anymore after 36 years.

If you’re so fed up….why don’t u leave – now…..look at your note….you’re blaming president Obama and the world for IBM’s problems. IBM’s problem is the kind of pathetic attitude you express in your post.

Actually, I AM leaving on my own terms and of my own volition. I can’t take it anymore. Between HR, Finance (bean counters) and executives that micro manage to the nth degree I had to get out. I took the transition package offered last year. It was a scary decision and I am still unsure of how I am going to pay my bills. I am one of the economic statistics that see no full time jobs available (I have applied to about 70-75 jobs in the past 12 months) – no benefits (won’t mention why since you seem to be sensitive to political observations and extremely narrow minded)). I have had two jobs for 17 years and a third per diem job for 3 years. IBM will survive due to tons of cash they are sitting on and will either pay their way out of the mess or implode. I have been with IBM for 36 years.

Ken
July 2, 2013 at 10:05 am

I worked fro IBM in Australia from 1989 to 1993 – in the early ’90’s, they had a big staff reduction in IBM Australia. Now, back then (and maybe now), all employees had their annual performance rating, and were rated from 5 (lift your game or you’re out the door) to 1 (you are recognized world wide as being able to walk on water). So, what happened when IBM Australia had to get rid of several hundred people? Did HR go through the list of employees, get the names of all 5 and 4 rating people? Did they f***. No – they just asked for volunteers to take a redundancy package.

So, who were the ones that applied? All of those who knew they could walk out of IBM one day, with a nice golden handshake, and into a more lucrative job the next day. IBM Australia lost a lot of people it really couldn’t afford to lose. I knew personally a bunch of the midrange country experts – all of them left, and went into consulting, working for other companies… IBM’s loss.

What’s the bet that every time IBM have shed staff, they’ve done the same. Let the people who knew they could get something good elsewhere, and keep the time-serving deadwood.

My firm is a small user with terrible IBM customer service experience. IBM gives every indication that they intentionally design service as a difficult, frustrating process, with no potential for resolution. Instead of fixing the problem, they just add another layer of difficulty, ad infinitem. It’s madness. We are actively looking at alternatives to IBM. So far it looks like companies who care about their employees, and have competent customer service in-country (not sending service calls to India except for those that originate there) actually have a superior product at a fair price. I don’t know what fate IBM will face, but I am eager to end our business relationship as soon as possible.

John
July 2, 2013 at 2:53 pm

I am ready for a new column, or at least a different picture on this one. I am not sure which disturbs me more the message or Ginny’s picture.
…
I know IBM is leading the way where corporations treat their customers and employees poorly. Large companies often can survive bad management and bad business decisions for over a decade. So I don’t see any change in this situation for a long time. It will be a problem that my children will have to endure too. IBM demise will be slow and quiet. IBM is doing a great job keeping things secret and the press is doing a great job ignoring important stories.
…
Someday historians will document IBM during these times. Ginny will become the face of IBM during this dark time.
…
Lets change the subject and find something better to discuss.

LOL Her picture look like from an advert ” Hi, I’m Ginni… and I use Crest Whitening Strips”
p.s. and a plug for botox and or photoshop

John
July 3, 2013 at 1:43 pm

Photoshop is not an approved product in IBM. Due to spending freezes you have to get 3 VP’s to approve the spending exception.
.
The Botox and whitening strips are, however covered under the IBM executive benefits program.

SWblues
July 5, 2013 at 4:40 am

John, It took me over six months battling with Indian reviewers – who summarily rejected it, and US IP attorneys to get approval for a non IBM SW product license ($1000) via BOND that was required for a deliverable. There was a freeware non-commercial version, but it’s license stated that could not be legally for commercial purposes. The matter was resolved when to protect myself, I sent a note to the IP folks stating that by my notifying them (NOTES return receipt) IBM would be held legally responsible if I was forced to use the freeware version due to their delay. I had the full chain of correspondences and would have turned it over to the vendor.

Wow. Have we rewound back to 1993? Time to pull out the “IBM is dying” novels from then!

Anon
July 3, 2013 at 8:08 am

http://seekingalpha.com/article/1533392-forecasting-ibm-s-q2-and-share-price\
Second Quarter May Disappoint
Forecasting financial performance is an excellent way of assessing the company’s performance in the quarter relative to your expectations. It is also a key part of valuation. IBM, based on my forecast, should report declining revenue and operating income. That acts as a headwind to multiple expansion. Consequently, the return expectations are lower than they would be otherwise.

ItsBeenMurdered
July 5, 2013 at 4:21 pm

I agree Bob. IBM is a dying entity, being raped & plundered by the people at the top. Place accountants in the top most positions of any ‘non accountancy’ firm, and problems will always follow. They have no idea of how a company like IBM.

I spoke to management a dozen years ago about the pending demise of long-term deep skill-based engineers in support when they pulled the plug on deep skill development. I could have been talking to a room full of chimps, totally incapable of seeing the fact that the skills that many had developed over the previous 25 yrs had to be replaced when natural wastage took its toll. IBM have not developed skills to any reasonable degree for years. Rather claiming that budgets could not support skills development.

Customer care(sic) is a total joke

Operation Cairo is a disaster in the making

Annual ‘culling’ is now the norm, with the numbers being culled likely to grow

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oompa lumpa
July 14, 2013 at 1:11 pm

that chick looks like angelo mozillo in drag. ibm will wind up just like countrywide. she’ll make a mint though just like angelo did. how does one profit from orange bronzer?

Norman
July 19, 2013 at 1:42 pm

Couple of points:

1. China got hit in the last layoff as well, they really didn’t discriminate. They made such massive cuts that a number of hardware projects are now left in a state where they do not have enough people or the right people to try and make a go of it across the world. A lot of people feel this is the beginning of the end for the M in IBM. If you read the shareholder statement you will see cloud computing up 700% but that is only cause they bought the innovation. IBM has cut soo much out of R&D that now they pitch ideas wait for others to figure them out then buy the companies outright. Innovation that matters?

2. Interesting how ignorant the upper management is when it comes to this stuff. The CEO is out giving talks about the need for companies to hire more people than needed to help stay ahead of technology when her own company has less than needed to support the future challenges. Not to mention her own company is in the news each year for layoffs.

3. Really the employees at IBM is dont know who is in charge anymore, the answer is more than likely HR which thinks that it has saved IBM. Really they hire a diverse work force, but in doing so they bend the requirements for the diversity numbers. The reality is while others are hiring the best and brightest IBM is hiring the C students in order to become more diverse. With all the exceptions let in the people around just do not have the drive or the understanding to be able to deliver on the new challenges.

What does it all matter? Really IBM has enough money in the bank and through revenues to be able to be less of a hardware company and more of an investment company. The current model is to buy what is profitable and use that instead of innovating. They think that contractors are the best route, not always because of cost savings but because there is no press when they cut them (often, and you would be surprised how many high level don’t know this, the contractors cost more than just keeping the employees around).

Will the M in IBM exist in five years, more than likely not. But I think the company will be around until you see something like a wide scale depression. With only services to offer, and greatly marked up services at that, with no real product line to fall back on they will be very suspect to any wide scale market downturn.

Rockme
July 24, 2013 at 3:59 pm

As someone who is HEAVILY invested in Oracle, I have thoroughly enjoyed these posts. Here’s some more numbers – IBM = 57% of revenue from services. Oracle = 13% of revenues from services.

A Guy from GTS Europe
July 26, 2013 at 1:05 am

I’ve been working at one of IBM’s GTS sites for 5 years now.

Let me tell you that this article is 99% true. As time goes on, we can all see that IBM’s strategy, vision, whatever you call it is way off. So very wrong… Some 4-5 years ago IBM made up something called GDF. This is the point when the shit hit the fan. This is when IBM totally lost its focus and started focusing on numbers, measuring everything, even stuff that can’t be measured.

In the past years, upper management has successfully bloated every process, or if they couldn’t, they created another one on top of the old one. Bloating every process, increasing administration and paperwork related activities, and the sky is the limit.

In the same time, we have non-functional chairs, air condition being FUBAR, stinking toilets, chicken farm style open office environment, loud co-workers, etc.

It’s a joke…

And to top it off, most of the people here work for mind blowingly low salaries (even for country average!), even 3rd level support staff, not to mention lower qualified people.

Ronc
July 26, 2013 at 4:21 pm

“In the same time, we have non-functional chairs, air condition being FUBAR, stinking toilets, chicken farm style open office environment, loud co-workers, etc.” Thanks for sharing. Except for the co-worker comment, I wonder if the US locations have the same problems. Any US employees care to comment?

Ashwini
August 2, 2013 at 11:47 am

IBM is a Himalaya for the whole world. It can face any challenges, any storm, any flood. None of these things can exploit it. It’s the King of IT and will always remain.There were many companies in the past which came and disappears. IBM is the only one which is here from more than 100 years. It has the guts and courage to stand as a Market leader and others can just walk on the path made by IBM. Proud to be an IBMer.

Ronc
August 2, 2013 at 4:51 pm

Have you read the comments as well as the original article?

pretty007
August 18, 2013 at 12:35 pm

Brainwashed by IBM…

look-up AT&T in google! 100 years plus

twaj
February 8, 2014 at 9:38 am

How many year you have been with IBM? I assume you have very less experience with the company and the the industry.

Anonanon
August 7, 2013 at 7:17 am

*search and replace all IBM with HP*

Angela
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John
August 13, 2013 at 2:31 pm

14ht Aug 2013…. You heard it here first, IBM WILL sell its services business, our analysis seems to leads to this conclusion, Global delivery (GDC) for services is huge and these aggressive cost cutting (Heads) makes it attractive to any potential buyer…

Kliff
August 15, 2013 at 3:36 am

I was RA’d in march 2013, was ready to get heck out, tired of mis-management, un-equal workloads.I made the old retirement plan and very gratefull for having what I have.
My manager only looked at numbers. He was blind to what was going on, or knew and didn’t care.
IBM and other big coorporations only care about profits, employees don’t matter anymore, its the numbers game. Employees are just a liability now, not an asset.

IBM would outsource every job title if it would work. Outsource the account customer engineer and you would see a collapse of service and loss of customers big time.

IBM—— Implemented by Morons.

Joe
August 17, 2013 at 8:05 am

Greetings to this Blog,

I work for IBM now as of August 15/2013 in their huge but empty site in Rochester Minnesota. I am hoping some IBM customers are reading the blogs to get an idea about the impending wreck they are going to hit if they do not start migrating to in house grown software or some other non outsourcing provider.

IBM Has 440 K employees, only about 80K in USA and may be 50K in non BRIC nations. IBM is firing its “15-25 year experience” people in USA to replace them with Chinese and Indian employees. The USA employees have no interest in providing training to those foreign workers.

The service calls are taking more than 4-8 weeks to get resolved now and the customers are resorting to drastic measures to resolve their problems on their own. Good for you IBM customers, it is about time you start rolling your own and may be attract ex IBM brilliant employees with wealth of expertise and inner knowledge of the products they built for you.

I plan to leave or get resourced because I decided that there is no use working for such insane company. Please check Jinny’s face, is that a face you can trust? She and her staff of marketeers have a one track mind: How do I dismantle the company and retire with 100 million bucks.

yeah… and to think it came as a “cost take out strategy”, to reduce or eliminate waste
hahahahaha, best joke ever!

William
August 23, 2013 at 12:34 pm

I met with the IBMer from India before leaving to explain to him how I have been doing only part of my vast set of hardware engineering tasks that will be done by someone still working for the company. Probably 80% of my work will just completely fall by the wayside. All of the Asia pacific printer customer will get no more USB support from IBM. IBM will loose those customers ,, they would be crazy to create more chips at IBM with no support. Anyway as I was saying. The Indian engineer that I met with wanted a step-by-step approach to my work. There were really only two steps to share 1) find the problem 2) fixit. That is not going to go well for IBM. Customers are going to be very upset and understandably so … they pay millions of dollars to create silicon at IBM.

For what it’s worth, I want to point out here that recently my calls to IBM Technical Support have been responded to by people with email addresses that end in @ph.ibm.com instead of @us.ibm.com
At the same time, I have noticed the quality of support has DRASTICALLY DECLINED, both in technical knowledge, troubleshooting skills, and communications skills. Frankly, it just sucks.

Russ Ramirez
September 9, 2013 at 9:40 am

Once upon a time, IBM was driven by a combination of Engineering and Marketing. As the old guard retired, that left a void that IBM had a hard time compensating for in the 80’s when I first worked for them. Then the stock market dynamics of companies being short-term focused kept increasing to the point where neither Akers or Gerstner could not be held accountable for IBM’s stock price. Once that shift had fully taken hold, the thought leadership of yesteryear was gone forever. Yes, technology changed how IBM could make money, but factions within IBM knew where and how to pivot, but the entirety of Sr Management, most with non-technical backgrounds, could not resolve the internal fights. For example, why didn’t IBM leverage the Grid Computing (now Cloud) and make a comeback as the tides were turning? Because they have been paralyzed for decades from the top down. The same thing has started happening at Microsoft. Once these companies cannot lead technologically (forget about Jeopardy playing computers and IBM’s Patent machine), they loose their way and max-out the leverage they can ever possibly have in the marketplace. I’m one of the lucky ones that got laid-off early, but I knew deep down that IBM was no more and no super hero CEO could ever turn the clock back. Could IBM develop an entirely new market and be wildly successful (and lucky) in it now? NO WAY!

Nice post Cringely!

Roger
September 15, 2013 at 9:49 am

I am an IBM retiree who worked for IBM from 1969-2000. I started as a Customer Engineer dedicated to serving our customers and I could do ANYTHING to make sure they were satisfied. If they weren’t and a complaint was made, local management had to spend untold hours explaining to higher management what happened, how it happened, and what they were going to do to make sure it never happened again. As the years passed I saw this once great company that I was so proud to work for turn into a company that I didn’t even want to admit I worked for. How sad that this once great institution has turned into a shell of what it once was.

Doc
September 20, 2013 at 2:39 am

I wonder if Ginni talked with the Greek Prime Minister about expanding their operations with cheaper Greek employees…

YouPooToo
September 25, 2013 at 3:12 am

In using / contacting IBM in Australia – the management here, and the “We have no idea what any other department does” type bullshit – and they don’t know the numbers, won’t find out, won’t transfer the calls etc., etc., etc..

Can only be described as a bunch of nazi fucks.

Idiots.

“Hi can I borrow your pencil sharpener?”

“Ohhhh need a requisition form + 5 forms of ID + it has to go to the requisiitions dept, + it will take 6 weeks and then you need written authorisation from the manager, and you have to supply a business plan, and to tell us in detail, exactly which pencl is going to be sharpened, what is the pencil going to be used for, what the writing is going to be about, who it is going to be sent too, are they authroised to receive it… blah blah blah…..”

The entire range of my experiences with IBM run like that.

Fuck IBM.

Dave Lee
October 19, 2013 at 5:19 am

Can a class action be filed by employees or shareholders against the executives for knowingly damaging a company in order to boost their own personal profits ? In other words if you can prove that the execs are reaping excessive personal profits and making decisions that are detrimental to the company can they be sued for willful negligence ? I know this would be a hard one to prove but was wondering if there ever was a precedent for it.

JB
November 6, 2013 at 7:52 am

When I was laid off in 2008, my manager made clear that I wasn’t being fired, but rather my position (as a mainframe programmer) was being eliminated. I had 30 days to find a new position within IBM. The internal IBM job posting site listed 3 jobs in all of the US that I was qualified for. Overseas, there were over 3000. I loved my job for the first 20 years, and hated it for the last 15. I took early retirement (at age 61) and have never been happier. I getting ready to sell my 400 shares of IBM stock – I don’t see any point in holding on to them any longer.

prh123@live.com
November 11, 2013 at 5:19 am

IBM GLOBAL SERVICES was banned from GSK Billion dollar SAP implementation in both RTP, NC and London, England, interestingly they replaced EMC with NetApp than fails at 63% utilization and on any failure on RAID 6 twelve disk stripping across the same number.

At GM the IBM account rep in 2008 told me they still get paid even though they had 23 SAP financial instances and data centers for SAP globally.

PHILIPS in 1998 had them as a global infrastructure partner and still only one sad division used them for outsourcing, they hire people for the contract, no longer have any bench strength or loyalty. They said on time and on budget, but they missed items that cost millions of dollars during the implementation, dropped the ball and lost confidence of client.

Hey, do the right thing is always easy “when” you know what the right thing is, they just want to get paid, not much of a business partner to anyone in fortune 100.

eatme
December 22, 2013 at 4:36 pm

YouPouToo, you are right on the money ,worst company I have ever worked for, never witnessed so much paper shuffling in my life, incompetent so called leaders who burry and hide within 12 levels of management, archaic 1940 german procedures. Rubbish internal systems put together by 1980’s programmers, 12 stupid systems doing the same thing. This is the most paranoid friggen company in the world, who in their right mind would hand over the keys to this mob is crazy. Yet to line up their pockets they continue to outsource to incompetent staff to india, then have the nerve to fly them out here every 6 months and u report to them. Fucken joke. Embarrassing to say the least, I love the way they brain wash the young kids there, strip any form of humanity from them by conditioning them, oh yes and they are the biggest hypocrites ever.

Uda Macro Finance
December 7, 2013 at 3:28 pm

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Whether it’s corporate bean counting over delivered customer value…
or personal bean consumption…
both result in hot air…sooner or later….

WEB often has said that they at BRK “eat their own cooking”…
a not-so-secret sauce for phenomenal success…?

An IBMer
February 3, 2014 at 3:26 pm

You bet, end of 2014 IBM shares will be for $145. STG will sink the boat again, huge differences between GEOs and brands, most of them rely on one or two core customers, which definitely does not bring a perspective business and bright future. Together with the “junior” and incompetent executive staff at the former GMTs, I am pretty sure.

6-years-an-IBMer
February 7, 2014 at 1:49 pm

Back to creative capitalism -> Big IBM fails and multiple small efficient companies emerge. Only way out. IBM can’t fix itself. Period. Ok ok it will be ugly… Existing IBM management will have to go and not head up the spinoffs… but in 8,9 or 10 years after, the kinks will be worked through… The only question I have is — will IBM just keep selling pieces off to China or even India companies so most all jobs will leave the US ? Oh yes – I am thinking HP will go first. Keep your resumes updated.

IBM has used unethical practice to win project and has accessed the information on quotes of Accenture.

twaj
February 8, 2014 at 9:32 am

One of the most efficient and systematic tool used by IBM which I have seen in recent years is PBC (Personal Business Commitment) and based on that they indirectly layoff an employee. Its a tool and mechanism devised to review employee’s performance at the year end and based on that employees are rated. 1 being most excellent contributor to company’s success, 2+ being strong contributor, 2 being solid contributor, 3 being low contributor and 4 being worst. Over past two years that is 2012,2013, Most employees have been rated 2, 3 and 4( figures being confidential by company records). As a result company revised the salary increment, bonus structure for these (2,3,4) rated employees. Company chose not to give increment to 1,2+,2 rated employees until late of dec 2013 and increment rate being around 3.5-4.5%. In the fiscal 2014, Company has decided not to give bonus to anyone( which was based on company and employee’s performance) and also increment being given is subjected to only few employees subjected to various parameters and meagre. These ratings are decided on what factors those are not clear as company doesn’t have any proper guiding principle or base which would decide what should be assessment criteria for these PBC ratings. Each project has its own set of PBC goals which employee has to fulfill and in the year end, it depends on manager what he/she has to give to his/her reportee. Employee with rating 4 has to immediately leave the company the very next day and won’t be entitled to various benefits as per company’s policy. The employee with rating 3 has three months and is kept under programme called PIP ( Performance Improvement Programme ) If he/she fails to improve his/her performance they are laid off after completion of programme. Again PBC rated 3 employee is not entitled to any benefit for the financial year. Now the latest news coming within inside is that middle and lower management are being forced to give bad rating to their respective business unit employees. This would give management the upper hand to stop the voluminous increment process, as they would be giving less increment to less people and not to forget about abolishing of bonuses. There has been rumors that IBM laid off more than 5000 contractors in India alone in the year 2012. The attrition rate is rising higher in 2014 as more and more news are emerging as most employees are being very poorly rated and most of the business operations are being moved to more cheaper markets such as Mexico,Brazil and Philippines. Most of the projects are facing scarcity of resources and company is hiring graduate hires rather than experienced hires on account of getting more cheaper labor and making a single person to do the workload equivalent to 4 person’s is new trend started by company inorder to be more profitable. Company is going through serious unethical management and business strategy crisis and they are ruining it.

If you are just out of school and looking for a good employer, look elsewhere. I’m a long time Canadian IBMer, and believe me, you don’t want to work here. For the tip of the iceberg, just have a look at http://www.endicottalliance.org/jobcutsreports.php

Mr. Cringely, you’ve nailed this on the head. Too bad mainstream media doesn’t report it like it is.

Howard
April 8, 2014 at 2:19 pm

Yes … we (some of us) see it inside the company… We work in products that are REALLY good and meet customer need… BUT… the “management” sets idiotic quotas — and then cuts staff when those quotas are not met… Of course, at that point SUPPORT and the ability to enhance the product go down the tubes… and so customers stay away — BECAUSE (as the article pointed out) the support becomes inadequate — NOT because of “poor” staff (I think that the Support Staff that I have worked with are OUTSTANDING) — but because they are HUMAN and there is a LIMIT to how much you can impose on any one (or two) member(s) of Support …
Of course, when customers now [legitimately] bail out on the product — the “Management” can now “claim” that the decision to downsize and (ultimately) eliminate the product is “correct” — this is known as a “self-fulfilling prophecy”…
Except that the logical end of such prophecy is “doom”…
Question:
When Sam Palmisano was in charge, did he ever have such an insane approach?

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